AGREEMENT AND PLAN OF MERGER by and between NATIONAL CITY CORPORATION and MAF BANCORP, INC. dated as of April 30, 2007
EXHIBIT
2.1
Execution
Copy
AGREEMENT
AND PLAN OF MERGER
by
and
between
NATIONAL
CITY CORPORATION
and
MAF
BANCORP, INC.
dated
as
of April 30, 2007
AGREEMENT
AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER, dated as of April 30, 2007 (this
“Agreement”), is made by and between NATIONAL CITY
CORPORATION, a Delaware corporation (“National City”), and
MAF BANCORP, INC., a Delaware corporation (“MAF”).
National City and MAF are sometimes referred to herein collectively, as
“Parties”, and each, as a “Party”.
RECITALS
A. Upon
the
terms and subject to the conditions set forth in this Agreement, the Parties
intend to effect a merger of MAF with and into National City (the “Merger”),
with
National City the surviving corporation (the “Surviving
Corporation”).
B. The
respective boards of directors of National City and MAF have each determined
that the Merger and the other transactions contemplated hereby are in the best
interest of their respective stockholders, and therefore, have approved the
Merger, this Agreement, the plan of merger in this Agreement and the
consummation of the transactions contemplated hereby.
C. For
Federal income tax purposes, it is intended that the Merger shall qualify as
a
reorganization under the provisions of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the “Code”),
and
that this Agreement be and hereby is adopted as a “plan of reorganization”
within the meaning of Sections 354 and 361 of the Code.
NOW,
THEREFORE, in consideration of the foregoing premises and the representations,
warranties and agreements contained herein, the Parties hereby agree as
follows:
I.
DEFINITIONS; INTERPRETATION
1.1 Certain
Defined Terms.
As used
in this Agreement, in addition to the terms defined elsewhere herein, the
following terms shall have the following meanings ascribed to them in this
Section 1.1:
“Action”
means
any claim, action, suit, arbitration, inquiry, hearing, investigation or
proceeding by or before any Governmental Authority.
“Affiliate”
means,
when used with reference to a specified Person, another Person that, either
directly or indirectly, through one or more intermediaries, Controls, is
controlled by, or is under common control with, the Person
specified.
“Associate”
has
the
meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act.
“Average
National City Stock Price”
means
the average of the per share closing prices of the National City Common Stock
on
the New York Stock Exchange (as reported by The
Wall Street Journal
(Mid-West Edition)) for the twenty (20) trading day period ending on the trading
day immediately preceding, but not including, the Federal Approval Date (the
“Twenty
Day
Period”)
(for
the sake of clarity, such twentieth (20th) trading day shall be considered
the
last full trading day included within the valuation period). The Average
National City Stock Price shall be calculated to the nearest one hundredth
of
one cent.
“BHC
Act”
means
the Bank Holding Company Act of 1956, as amended.
“Business
Day”
means
any day that is not a Saturday, a Sunday or other day that The Federal Reserve
Bank of Cleveland is closed.
“Claim”
means
a
claim, demand, assessment, Governmental Order, Action or settlement involving
an
Indemnifiable Loss.
“Confidentiality
Agreements”
means
the letter agreement dated November 21, 2006, between the Parties regarding
the use of confidential information of MAF and the letter agreement dated
April 4, 2007, between the Parties regarding the use of confidential
information of National City.
“Control”
(including the term “controlled by” and “under common control with”) means the
possession, directly or indirectly or as trustee or executor, of the power
to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of stock, as trustee or executor, by contract or credit
arrangement or otherwise.
“DGCL”
means
the General Corporation Law of the State of Delaware.
“Disclosure
Letters”
means
the MAF Disclosure Letter and the National City Disclosure Letter,
collectively.
“Domain
Names”
means
Internet electronic addresses, uniform resource locators and alpha-numeric
designations associated therewith registered with or assigned by any domain
name
registrar, domain name registry or other domain name registration authority
as
part of an electronic address on the Internet and all applications for any
of
the foregoing.
“DSUs”
means
deferred stock units outstanding under the MAF Deferred Compensation
Plans.
“Environmental
Law”
means
any Law relating to (i) the health, protection, preservation, containment
or restoration of the environment including, without limitation, air, water
vapor, surface water, groundwater, drinking water supply, surface soil,
subsurface soil, wetlands, plant and animal life or any other natural resource,
conservation, and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of Hazardous Substances. The term Environmental Law includes,
without limitation, (x) the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601,
et seq.;
the
Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. 9601(2)(D);
the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901,
et seq.;
the
Clean Air Act, as amended, 42 U.S.C. Section 7401, et seq.;
the
Federal Water Pollution Control Act, as amended by the Clean Water Act, 33
U.S.C. Section 1251, et seq.;
the
Toxic Substances Control Act, as amended, 15 U.S.C. Section 9601,
et seq.;
the
Emergency Planning and Community Right to Know Act, 42 U.S.C.
Section 11001, et
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seq.;
the
Safe Drinking Water Act, 42 U.S.C. Section 300f, et seq.;
and all
comparable state and local Laws respecting the interpretation or enforcement
of
same and (y) any common law (including without limitation common law that
may impose strict liability) that may impose liability for injuries or damages
due to the release of any Hazardous Substance.
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended through the
date
hereof.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended through the date hereof and
the
rules and regulations promulgated thereunder.
“Exchange
Ratio”
means
the quotient of (i) $56.00 divided
by
(ii) the Average National City Stock Price; provided,
however,
that:
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(a)
if, and only if, both (1) the Final Index Price is less than the
product
of .80 multiplied by the Initial Index Price, and (2) the Average
National
City Stock Price is less than the product of .80 multiplied by the
Initial
National City Stock Price, then the Exchange Ratio shall be equal
to
$56.00 divided
by
the product of .80 multiplied by the Initial National City Stock
Price
(“Fixed
Ratio Provision”);
or
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(b)
if, and only if, (1) the Final Index Price is less than the product
of .80
multiplied by the Initial Index Price, (2) the Average National City
Stock
Price is less than the product of .80 multiplied by the Initial National
City Stock Price, and (3) the MAF Value Per Share is less than $49.00
(based on a Exchange Ratio calculated in accordance with the Fixed
Ratio
Provision), then the Exchange Ratio shall be adjusted so that it
is equal
to the quotient of (A) $49.00 divided
by
(B) the Average National City Stock Price (the “Fill-Up
Provision”).
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The
Exchange Ratio shall be calculated to the nearest ten
thousandth.
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“Federal
Approval Date”
means
the day the FRB issues an order approving consummation of the
Merger.
“Final
Index Price”
shall
mean the average of the value of the Index as of the close of trading on each
of
the trading days as reported by Bloomberg L.P. or such other recognized
electronic source during the Twenty Day Period.
“FRB”
means
the Federal Reserve Board.
“Governmental
Authority”
means
(i) any United States federal, state or local government, governmental,
regulatory or administrative authority, agency, panel, instrumentality,
political subdivision, branch, department, official, entity or commission,
(ii) any court, tribunal, or judicial or arbitral or mediation body, or
(iii) governmental or quasi-governmental body exercising,
or entitled to exercise, any administrative, executive, judicial, legislative,
police, regulatory or taxing authority or power of any nature pertaining to
government.
3
“Governmental
Order”
means
(i) any order, writ, judgment, ruling, injunction, decree, stipulation,
determination, directive or award entered by or with any Governmental Authority,
(ii) any written agreement or memorandum of understanding with a
Governmental Authority, (iii) any commitment letter or board resolution to
a Governmental Authority, or (iv) any extraordinary supervisory letter from
a Governmental Authority.
“Hazardous
Substance”
means
(i) any hazardous wastes, toxic chemicals, materials, substances or wastes
as defined by or regulated by any Environmental Law; (ii) any “oil,” as
defined by the Clean Water Act, as amended from time to time, and regulations
promulgated thereunder (including crude oil or any fraction thereof and any
petroleum products or derivatives thereof); (iii) any substance, the
presence of which is prohibited, regulated or controlled by any applicable
Laws
now in force or hereafter enacted relating to waste disposal or environmental
protection with respect to the exposure to, or manufacture, possession,
presence, use, generation, storage, transportation, treatment, release,
emission, discharge, disposal, abatement, cleanup, removal, remediation or
handling of any such substance; (iv) any asbestos or asbestos-containing
materials, polychlorinated biphenyls (PCBs) in the form of electrical equipment,
fluorescent light fixtures with ballasts, cooling oils or any other form, urea
formaldehyde, atmospheric radon; (v) any solid, liquid, gaseous or thermal
irritant or contaminant, such as smoke, vapor, soot, fumes, alkalis, acids,
chemicals, pesticides, herbicides, sewage, industrial sludge or other similar
wastes; (vi) industrial, nuclear or medical by-products; (vi) any lead
based paint or coating; and (viii) any underground storage
tank(s).
“HOLA”
means
the Home Owners’ Loan Act of 1933, as amended.
“Indemnifiable
Loss”
means
any and all costs, damages, disbursements, obligations, penalties, liabilities,
losses, expenses, assessments, judgments, settlements or deficiencies (including
any interest, penalties, investigation, legal, accounting and other costs and
expenses reasonably incurred in the investigation, collection, prosecution
and
defense of any Action and amounts paid in settlement), actually paid or incurred
by a D&O Indemnitee, as applicable.
“Index”
shall
mean the KBW Bank Index (as published by Bloomberg L.P. as the “BKX
Index”).
“Initial
National City Stock Price”
shall
mean $36.90.
“Initial
Index Price”
shall
mean $114.78.
“Intellectual
Property”
means
any and all patents and patent applications; trademarks, service marks, trade
names, brand names, trade dress, slogans, logos and Domain Names, and the
goodwill associated with any of the foregoing; inventions (whether patentable
or
not), industrial designs, discoveries, improvements, ideas, designs, models,
formulae, patterns, compilations, data collections, drawings, blueprints, mask
works, devices, methods, business methods, techniques, processes, know-how,
proprietary information, customer lists, software, technical information and
trade secrets; copyrights, copyrightable works, and rights in databases and
data
collections; economic rights of authors and inventors; other intellectual or
industrial property rights and foreign equivalent or counterpart rights and
forms of protection of a similar or analogous nature to any of the foregoing
or
having similar effect in any jurisdiction throughout
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the
world; and registrations and applications for registration of any of the
foregoing, including any renewals, extensions, continuations (in whole or in
part), divisionals, re-examinations or reissues or equivalent or counterpart
thereof; and all documentation and embodiments of the foregoing.
“IRS”
means
the United States Internal Revenue Service.
“Knowledge
of MAF”
means
the actual knowledge, after reasonable due inquiry, of the Persons identified
in
Section 1.1 of the MAF Disclosure Letter.
“Knowledge
of National City”
means
the actual knowledge, after reasonable due inquiry, of the Persons identified
in
Section 1.1 of the National City Disclosure Letter.
“Law”
means
any United States federal, state, local statute, law, ordinance, regulation,
rule, code, Governmental Order, license, permit, authorization, approval,
consent, agreement, or requirement enacted, adopted, issued or promulgated
by
any Governmental Authority.
“Lien”
means
any security interest, pledge, mortgage, lien, charge, hypothecation, option
to
purchase or lease or otherwise acquire any interest, conditional sales
agreement, adverse claim of ownership or use, title defect, easement, right
of
way or other encumbrance of any kind, other than those arising by reason of
restrictions on transfers under federal, state and foreign securities
Laws.
“Loan
Portfolio Properties, Trust Properties and Other Properties”
means
any real property, interest in real property, improvements, appurtenances,
rights and personal property attendant thereto, which is owned, leased as a
landlord or a tenant, licensed as a licensor or licensee, managed or operated
or
upon which is held a mortgage, deed of trust, deed to secure debt or other
security interest by MAF or any MAF Subsidiary whether directly, as an agent,
as
trustee or other fiduciary or otherwise.
“MAF
Common Stock”
means
the common stock, par value $0.01 per share, of MAF.
“MAF
Disclosure Letter”
means
a
letter delivered by MAF to National City on or before the execution and delivery
of this Agreement setting forth, among other things, items the disclosure of
which is required under this Agreement, either in response to an express
disclosure requirement contained in a provision of this Agreement or as an
exception to one or more of the representations, warranties or covenants of
MAF
contained in this Agreement. The MAF Disclosure Letter is arranged in a format
in which the disclosures made therein are arranged in paragraphs or sections
corresponding to the numbered and lettered sections and subsections of this
Agreement, however, the matters expressly disclosed in the MAF Disclosure Letter
shall not be specifically limited to the corresponding representation, warranty
or covenant to which such disclosure paragraph or section relates. The inclusion
of any matter in the MAF Disclosure Letter shall not be deemed an admission
or
otherwise to imply that any such matter is material for purposes of this
Agreement or any other reason.
“Material
Adverse Effect”
means,
with respect to a Party, any event, occurrence or effect that (i) has a
material negative impact on the financial condition, business or results of
operations of the Party and its Subsidiaries, taken as a whole, or
(ii) would materially impair the ability of
5
the
Party
to perform its obligations under this Agreement or to consummate the
transactions contemplated hereby on a timely basis; provided,
however,
that in
determining whether a Material Adverse Effect has occurred, there shall be
excluded (with respect to each of clause (A), (B), (C) or (D), to the extent
that the effect of a change on it is not materially different than the U.S.
banking or financial services organizations identified in Section 1.1 of the
National City Disclosure Letter) any effect to the extent attributable to or
resulting from (A) any changes in Laws or interpretations of Laws generally
affecting U.S. banking or financial services organizations, (B) any change
in U.S. GAAP or regulatory accounting requirements, generally affecting U.S.
banking or financial services organizations, but not uniquely relating to the
Party, (C) events, conditions or trends in economic, business or financial
conditions generally or affecting U.S. banking or financial services
organizations specifically (including changes in interest rates and changes
in
the markets for securities), (D) changes in national or international
political or social conditions including the engagement by the United States
in
hostilities, whether or not pursuant to the declaration of a national emergency
or war, or the occurrence of any military or terrorist attack upon or within
the
United States, or any of its territories, possessions or diplomatic or consular
offices or upon any military installation, equipment or personnel of the United
States, (E) actions or omissions of the Party taken pursuant to Section
6.2(f) and (j) and Section 6.5(g) of this Agreement or with the prior written
consent of the other Party in contemplation of the transactions contemplated
hereby, (F) events, facts or circumstances described in Section 4.22 of the
National City Disclosure Letter and Section 5.31 of the MAF Disclosure Letter
and (G) the announcement of this Agreement or the transactions contemplated
hereby.
“MAF
Bank”
means
MAF Bank, fsb, a federally chartered savings bank and a wholly-owned Subsidiary
of MAF.
“MAF
Value Per Share”
means
the product of the Exchange Ratio (prior to giving effect to clause (b) in
the
definition of Exchange Ratio above) multiplied by the Average National City
Stock Price.
“National
City Common Stock”
means
the common stock, par value $4.00 per share, of National City.
“National
City Disclosure Letter”
means
a
letter delivered by National City to MAF on or before the execution and delivery
of this Agreement setting forth, among other things, items the disclosure of
which is required under this Agreement, either in response to an express
disclosure requirement contained in a provision of this Agreement or as an
exception to one or more of the representations, warranties or covenants of
National City contained in this Agreement. The National City Disclosure Letter
is arranged in a format in which the disclosures made therein are arranged
in
paragraphs or sections corresponding to the numbered and lettered sections
and
subsections of this Agreement, however, the matters expressly disclosed in
the
National City Disclosure Letter shall not be specifically limited to the
corresponding representation, warranty or covenant to which such disclosure
paragraph or section relates. The inclusion of any matter in the
National City Disclosure Letter shall not be deemed an admission or otherwise
to
imply that any such matter is material for purposes of this Agreement or any
other reason.
“OTS”
means
the Office of Thrift Supervision.
6
“PBGC”
means
the Pension Benefit Guaranty Corporation.
“Permitted
Real Property Encumbrances”
means
taxes and assessments, both general and special, which are a Lien but not yet
due and payable, zoning and land use restrictions arising under applicable
Law,
easements and other matters of record that do not adversely affect the current
use or value of the Owned Real Property.
“Person”
is
to
be interpreted broadly to include any Governmental Authority, bank, savings
association, joint-stock company, individual, partnership, firm, corporation,
limited liability company, association, trust, unincorporated organization
or
other entity, as well as any syndicate or group that would be deemed to be
a
person under Section 13(d)(3) of the Exchange Act.
“RSUs”
means
restricted stock units under a MAF Option Plan.
“▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”
means
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated
thereunder.
“SEC”
means
the United States Securities and Exchange Commission.
“Secretary
of State of Delaware”
means
the Secretary of State for the State of Delaware.
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Subsidiary”
of
any
Person means another Person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect at
least a majority of its board of directors or other governing body (or, if
there
are no such voting interests, fifty percent (50%) or more of the equity
interests of which) or is owned directly or indirectly by such first Person
or
by another subsidiary of such first Person.
“Significant
Subsidiary”
has
the
meaning ascribed to that term in Rule 1-02 of Regulation S-X
promulgated by the SEC.
“Tax”
or
“Taxes”
means
any and all federal, state, local, or foreign income, payroll, withholding
tax,
gross receipts, assessments, charges, license, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Section 59A of the Code), capital stock, franchise, profits, real property,
personal property, sales, use, transfer, registration, value added, alternative
or add on minimum, estimated, or other tax of any kind whatsoever, including
any
interest, penalty, or addition thereto, whether disputed or
not.
“Tax
Return”
means
any return, declaration, report, claim for refund, or information return or
statement relating to Taxes (including, without limitation, returns for
estimated and withholding Taxes), including any schedule or attachment thereto,
and including any amendment thereof.
▇
“▇.▇.
▇▇▇▇”
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ generally accepted accounting principles and practices as in
effect at the date of the financial statement to which it refers, applied
consistently by a Person in the preparation of such financial statements
throughout the periods involved.
1.2 Other
Terms.
The
following terms shall have the meanings defined in the Preamble, Recital or
Section indicated.
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Acquisition
Transactions
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6.1
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Agreement
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Preamble
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Benefit
Agreements
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4.10
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BSA
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4.13(b)
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Closing
|
7.1
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Closing
Date
|
7.1
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Code
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Recital
C
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Consents
|
8.1(c)
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Continuing
Employee
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6.5(b)
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Converted
Option
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3.2(a)
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Converted
RSU
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3.2(b)
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Covered
Parties
|
6.9(b)
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CRA
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4.13(b)
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D&O
Indemnitees
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6.9(a)
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Delaware
Certificate of Merger
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2.1(b)
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DPC
Shares
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3.1(a)
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Effective
Time
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2.1(b)
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Eligible
Plans
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6.5(d)
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ESOP
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5.9(g)
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Exchange
Agent
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3.3(a)
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FDIA
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4.14
|
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Information
Request
|
6.18(a)
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Insurance
Expense Cap
|
6.9(c)
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Insurance
Policies
|
6.9(c)
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KBW
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5.15
|
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Lease
Agreement
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5.25(a)
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Leased
Premises
|
5.25(a)
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Letter
of Transmittal
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3.3(c)
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MAF
|
Preamble
|
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MAF
Contract
|
5.10
|
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MAF
Employee Plans
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5.9(a)
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MAF
Insiders
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6.19
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MAF
Meeting
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6.14
|
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MAF
Non-Qualified Plans
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5.9(f)
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MAF
Option
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3.2(a)
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MAF
Option Plans
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3.2(a)
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MAF
Preferred Stock
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5.3
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MAF
Reports
|
5.7(a)
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MAF
Subsidiary
|
5.4
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MAF
Unaudited Interim Financial Information
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5.7(b)
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8
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Material
Breach Notice
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6.18(a)
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Merger
Consideration
|
3.1(a)
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Merger
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Recital
A
|
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Monthly
Financial Information
|
6.2(h)
|
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National
City
|
Preamble
|
|
National
City Contract
|
4.10
|
|
National
City Employee Plans
|
4.9(a)
|
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National
City Options
|
4.3
|
|
National
City Option Plan
|
4.3
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National
City Reports
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4.7(a)
|
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National
City Significant Subsidiary
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4.4
|
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National
City Subsidiary
|
4.4
|
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National
City Unaudited Interim Financial Information
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4.7(b)
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New
Certificate
|
3.3(c)
|
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Notification
Period
|
6.18(b)
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Old
Certificates
|
3.3(a)
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Optionee
|
5.3
|
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Outside
Termination Date
|
9.1(b)
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Owned
Real Property
|
5.25(a)
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Party
or Parties
|
Preamble
|
|
Proxy
Statement
|
4.5
|
|
Real
Estate
|
5.25(a)
|
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Registration
Statement
|
4.5
|
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State
Entities
|
4.6
|
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Surviving
Corporation
|
Recital
A
|
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Trust
Account Shares
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3.1(a)
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1.3 Interpretation
and Rules of Construction.
In this
Agreement, except to the extent that the context otherwise requires,
(i) when a reference is made in this Agreement to the Preamble, a Recital,
Article, Section, Exhibit or Schedule, such reference is to the Preamble,
Recital, Article or Section of, or an Exhibit or a
Schedule to, this Agreement unless otherwise indicated, (ii) the
headings for this Agreement are for reference purposes only and do not affect
in
any way the meaning or interpretation of this Agreement, (iii) whenever the
words “include,” “includes” or “including” are used in this Agreement, they are
deemed to be followed by the words “without limitation”, (iv) the words
“hereof,” “herein,” “below,” “above” or “hereunder” and words of similar import,
when used in this Agreement, refer to this Agreement as a whole and not to
any
particular provision of this Agreement, (v) all terms defined in this
Agreement have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto, unless otherwise defined therein,
(vi) the definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms, (vii) any Law
defined
or referred to herein or in any agreement or instrument that is referred to
herein means such Law or statute as from time to time amended, modified or
supplemented, including by succession of comparable successor Laws,
(viii) references to a Person are also to its permitted successors and
assigns, (ix) the use of “or” means “either or both” unless expressly
indicated otherwise, (x) unless otherwise specified in this Agreement, all
references to currency, monetary values and dollars set forth herein shall
mean
United States (U.S.) dollars, (xi) references to “the
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date
of
this Agreement” or “the date hereof” are to April 30, 2007,
(xii) references to any Governmental Authority include any successor to
that Governmental Authority and (xiii) references to the “transactions
contemplated hereby” includes the transactions provided in this Agreement and
the Exhibits or Schedules to it. The Parties acknowledge that each Party
and its counsel have reviewed and revised this Agreement and that no rule of
construction to the effect that any ambiguities are to be resolved against
the
drafting Party shall be employed in the interpretation of this Agreement
(including all Schedules and Exhibits and Disclosure Letters) or any
amendments, supplements or modifications hereto. No provision of this Agreement
is to be construed to require, directly or indirectly, any Person to take any
action, or omit to take any action, to the extent such action or omission would
violate applicable Law (including statutory and common law).
II.
THE MERGER
2.1 Merger.
(a) Merger.
Subject
to the terms and conditions of this Agreement, at the Effective Time, MAF will
be merged with and into National City and the separate corporate existence
of
MAF will thereupon terminate. National City may at any time prior to the
Effective Time change the method of effecting the combination of National City
and MAF (including, without limitation, the provisions of this
Section 2.1), if and to the extent it deems such change to be desirable,
including, without limitation, a merger of either Party with a wholly-owned
Subsidiary of the other Party; provided,
however,
that no
such change shall (i) alter or change the amount or kind of consideration
to be paid to holders of shares of MAF Common Stock as provided for in this
Agreement, (ii) adversely affect the tax treatment of the transaction for
holders of shares of MAF Common Stock or (iii) materially impede or delay
consummation of the transactions contemplated by this Agreement. The Parties
agree to reflect any such change in an appropriate amendment to this Agreement
executed and delivered by the Parties.
(b) Effective
Time.
Subject
to the terms and conditions of this Agreement, on or before the Closing Date,
provided this Agreement has not been terminated pursuant to Section 9.1
below, the Parties shall cause a certificate of merger complying with the
requirements of Section 251 of the DGCL (the “Delaware
Certificate of Merger”)
to be
filed with the Secretary of State of Delaware. The Parties will make all other
filings or recordings required under the DGCL, and the Merger will become
effective at the time of the later of the following events to occur:
(i) the filing of the Delaware Certificate of Merger; or (ii) such
later time as shall be specified in the Delaware Certificate of Merger (the
“Effective
Time”).
(c) Effect
of the Merger.
The
Merger will have the effects specified in the DGCL and other applicable Law.
Without limiting the generality of the foregoing, National City will
be
the Surviving Corporation, and will continue its corporate existence in
accordance with the DGCL, and the separate corporate existence of National
City
and all of its rights, privileges, powers and franchises, public as well as
private, and all its debts, liabilities and duties as a corporation organized
under the DGCL, will continue unaffected by the Merger.
10
(d) Certificate
of Incorporation and By-Laws.
The
certificate of incorporation and by-laws of National City in effect immediately
prior to the Effective Time, shall be the certificate of incorporation and
by-laws of the Surviving Corporation as of the Effective Time.
(e) Directors
and Officers.
(i) The
directors and officers of National City immediately prior to the Effective
Time
shall be the directors and officers, respectively, of the Surviving Corporation,
from and after the Effective Time, until their successors have been duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the terms of the Surviving Corporation’s certificate of
incorporation and by-laws and the DGCL.
(ii) At
or
before the first meeting of the Board of Directors of National City following
the Effective Time, in accordance with the by-laws of National City, the Board
of Directors of National City shall, increase its size to such number as is
necessary to create one vacancy and shall elect ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (or, if
such individual is determined prior to the Effective Time to be unable or
unwilling to serve, then such other individual as may be designated by the
Board
of Directors of MAF and reasonably acceptable to National City) to fill such
vacancy until the then next regular annual meeting of National City
stockholders. In addition, National City’s Nominating and Board of Directors
Governance Committee shall recommend such individual to National City’s
stockholders for re-election as a director for the one year term commencing
after the next regular annual meeting of the National City stockholders, so
long
as such recommendation will not violate National City’s Corporate Governance
Guidelines or the Nominating and Board of Directors Governance Committee’s
fiduciary obligations and such individual is willing to continue to serve as
director and meets the director qualifications set forth in National City’s
Corporate Governance Guidelines in effect at the time of such
recommendation.
(f) Additional
Actions.
If, at
any time after the Effective Time, National City shall consider or be advised
that any further deeds, assignments or assurances or any other acts are
necessary or desirable to (i) vest, perfect or confirm, of record or
otherwise, in National City its right, title or interest in, to or under any
of
the rights, properties or assets of National City or MAF, or (ii) otherwise
carry out the purposes of this Agreement, National City and MAF and their
respective officers and directors shall be deemed to have granted to the
Surviving Corporation an irrevocable power of attorney to execute and deliver
all such deeds, assignments or assurances in Law or any other acts as are
necessary or desirable to (A) vest, perfect or confirm, of record or
otherwise, in National City its right, title or interest in, to or under any
of
the rights, properties or assets of National City or MAF or (B) otherwise
carry out the purposes of
this
Agreement, and the officers and directors of National City are authorized in
the
name of National City or MAF or otherwise to take any and all such
action.
11
III.
CONSIDERATION; CONVERSION OF SHARES; EXCHANGE PROCEDURES
3.1 Consideration;
Conversion of Shares.
(a) Merger
Consideration.
Subject
to Sections 3.1(b) and 3.1(f) below, at the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
MAF
Common Stock, each share of MAF Common Stock issued and outstanding immediately
prior to the Effective Time, with respect to each holder of record of such
shares, will be converted into the right to receive a number of fully paid
and
non-assessable shares of National City Common Stock equal to the product
(rounded down to the nearest whole share) of (i) the Exchange Ratio,
multiplied by (ii) the number of shares of MAF Common Stock held by such
holder of record (such product and the consideration provided in
Section 3.1(f) below dealing with fractional shares, is referred to herein
as, the “Merger
Consideration”).
Notwithstanding anything in this Section 3.1(a) to the contrary, at the
Effective Time, by virtue of the Merger, each share of MAF Common Stock
(A) beneficially owned by National City or any direct or indirect National
City Subsidiary (except for any such shares held in trust accounts, managed
accounts or in any similar manner as trustee or in a fiduciary or custodial
capacity (“Trust
Account Shares”)
or
acquired in satisfaction of debts previously contracted (“DPC
Shares”)),
and
(B) shares of MAF Common Stock held in the treasury of MAF, will be
cancelled and no shares of National City Common Stock or other consideration
will be issued or paid in exchange therefor.
(b) Cancellation
of Shares.
At the
Effective Time, the shares of MAF Common Stock will no longer be outstanding
and
will automatically be cancelled and will cease to exist. At and after the
Effective Time, certificates that represented shares of MAF Common Stock before
the Effective Time shall only represent the right to receive the Merger
Consideration.
(c) Rights
of Stockholders.
At the
Effective Time, holders of MAF Common Stock will cease to be, and will have
no
rights as, stockholders of MAF, other than rights to (i) receive any then
declared and unpaid dividend or other distribution with respect to such MAF
Common Stock having a record date before the Effective Time and
(ii) receive the Merger Consideration provided under this Article III.
After the close of business on the Business Day immediately preceding the date
of the Effective Time, there will be no transfers of shares of MAF Common Stock
on the stock transfer books of MAF, and shares of MAF Common Stock presented
to
the Surviving Corporation for any reason will be canceled and exchanged in
accordance with this Article III.
(d) Anti-Dilution
Adjustments.
If
National City changes (or the Board of Directors of National City sets a related
record date that will occur before the Effective Time and after setting the
Exchange Ratio for a change in) the number or kind of shares of National City
Common Stock outstanding by way of a stock split, stock dividend,
recapitalization, reclassification,
reorganization or similar transaction, then the Exchange Ratio will be adjusted
proportionately to account for such change.
(e) Effect
on National City Common Stock.
Each
share of National City Common Stock outstanding immediately prior to the
Effective Time will remain outstanding.
12
(f) No
Fractional Shares.
Notwithstanding any other provision of this Agreement to the contrary, neither
certificates nor scrip for fractional shares of National City Common Stock
shall
be issued in the Merger. Each holder of shares of MAF Common Stock who otherwise
would have been entitled to a fraction of a share of National City Common Stock
shall receive in lieu thereof cash (without interest) in an amount determined
by
multiplying the fractional share interest to which such holder would otherwise
be entitled (after taking into account all shares of MAF Common Stock owned
by
such holder at the Effective Time) by the Average National City Stock Price.
No
such holder shall be entitled to dividends, voting rights or any other rights
of
a stockholder of National City in respect of any fractional share of National
City Common Stock.
3.2 Conversion
of Stock Options and RSU’s.
(a) At
the
Effective Time, by virtue of the Merger and without any action on the part
of
any holder of any outstanding option to purchase shares of MAF Common Stock
granted by MAF or its predecessors pursuant to MAF’s existing stock option plans
listed in Section 3.2(a) of the MAF Disclosure Letter (the “MAF
Option Plans”),
whether vested or unvested (each, a “MAF
Option”),
each
MAF Option that is outstanding and unexercised immediately prior to the
Effective Time shall cease to represent a right to acquire shares of MAF Common
Stock and shall be converted automatically into the right to acquire shares
of
National City Common Stock (a “Converted
Option”),
on
the same terms and conditions as were applicable under the terms of the MAF
Option Plan under which the MAF Option was granted and the applicable award
agreement thereunder, including, but not limited to, vesting, such number of
shares of National City Common Stock and at such an exercise price per share
determined as follows:
(i) The
number of shares of National City Common Stock subject to a Converted Option
shall be equal to the product of (A) the number of shares of MAF Common
Stock purchasable upon exercise of the MAF Option and (B) the Exchange
Ratio, the product being rounded down to the nearest whole share;
and
(ii) The
exercise price per share of National City Common Stock purchasable upon exercise
of a Converted Option shall be equal to (A) the exercise price per share of
MAF Common Stock under the MAF Stock Option divided by (B) the Exchange
Ratio, the quotient being rounded up to the nearest cent.
As
soon
as practicable after the Closing Date, National City will provide each Optionee
with a letter confirming the number of shares of National City Common Stock,
exercise price and other relevant terms and conditions of the Converted
Option.
(b) At
the
Effective Time, by virtue of the Merger and without any action on the part
of
any holder of RSUs, all RSUs outstanding immediately prior to the Effective
Time
shall be converted to a number of RSUs equal to the number of RSUs held by
such
holder immediately prior to the Effective Time multiplied by the Exchange Ratio.
At and after the Effective Time, each outstanding RSU (a “Converted
RSU”)
shall
represent the right to receive a share of National City Common Stock in
accordance with the terms of the agreements and plans
13
applicable
thereto. Upon the conversion of the RSUs of a holder to National City Common
Stock, cash shall be paid in lieu of any fractional share interest of such
holder.
3.3 Exchange
of Certificates.
(a) Exchange
Agent.
Prior
to the Effective Time, National City shall designate National City Bank, or
a
depository or trust institution of recognized standing selected by National
City
and reasonably satisfactory to MAF, to act as exchange agent (the “Exchange
Agent”)
in
connection with the Merger pursuant to an exchange agent agreement providing
for, among other things, the matters set forth in this Section 3.3. Except
as set forth herein, from and after the Effective Time each holder of a
certificate(s) evidencing share(s) of MAF Common Stock (the “Old
Certificates”)
shall
be entitled to receive in exchange therefor, upon surrender thereof to the
Exchange Agent, the Merger Consideration for the shares of MAF Common Stock
so
represented by the Old Certificate surrendered by such holder thereof. The
certificates representing shares of National City Common Stock that constitute
the Merger Consideration shall be properly issued and countersigned and executed
and authenticated, as appropriate.
(b) Exchange
Fund.
As of
the Effective Time, for the benefit of the holders of Old Certificates, National
City shall make available to the Exchange Agent (i) the number of shares of
National City Common Stock issuable to holders of Old Certificates pursuant
to
Section 3.1(a) above and (ii) the estimated cash payable pursuant to
Section 3.1(f) above with respect to fractional shares. The Exchange Agent
shall invest any deposited cash as directed by National City. Any net profit
resulting from, or interest or income produced by, such investments will be
payable to National City. The Exchange Agent shall not be entitled to vote
or
exercise any rights of ownership with respect to the shares of National City
Common Stock held by it from time to time hereunder, except that it shall
receive and hold all dividends or other distributions paid or distributed with
respect to such shares for the account of the Persons entitled
thereto.
(c) Notice
of Exchange.
Within
five (5) Business Days after its receipt of the necessary MAF shareholder
information in a format compatible with the Exchange Agent’s systems, National
City shall cause the Exchange Agent to mail and/or make available to each record
holder of Old Certificates a notice and letter of transmittal (the “Letter
of Transmittal”)
advising such holder of the effectiveness of the Merger and the procedures
to be
used in effecting the surrender of the Old Certificate(s) for exchange. Upon
surrender to the Exchange Agent of Old Certificate(s), together with a Letter
of
Transmittal duly executed and completed in accordance with the instructions
thereon, and such other documents as may reasonably be requested, the Exchange
Agent shall promptly deliver to the Person entitled thereto appropriate
dividends or other distributions as provided in Section 3.3(f) below and
the Merger Consideration for the shares of MAF Common Stock represented by
the
Old Certificate(s) surrendered
by such holder thereof, and such Old Certificate(s) shall forthwith be canceled.
At National City’s option, National City shall issue a certificate or evidence
of shares in book entry form, representing the number of shares of National
City
Common Stock (a “New
Certificate”)
issuable to the holder of the Old Certificate(s) under this
Article III
(d) Transfer.
If
delivery of all or part of the Merger Consideration is to be made to a Person
other than the Person in whose name a surrendered Old Certificate is
14
registered,
it shall be a condition to such delivery or exchange that the Old Certificate
surrendered shall be properly endorsed or shall be otherwise in proper form
for
transfer and that the Person requesting such delivery or exchange shall have
paid any transfer and other Taxes required by reason of such delivery or
exchange in a name other than that of the registered holder of the Old
Certificate surrendered or shall have established to the reasonable satisfaction
of the Exchange Agent that such Tax either has been paid or is not
payable.
(e) Right
to Merger Consideration.
Until
surrendered and exchanged in accordance with this Section 3.3, Old
Certificates shall, after the Effective Time, represent solely the right to
receive in exchange therefor the Merger Consideration, together with any
dividends or other distributions as provided in Section 3.3(f) below, and
shall have no other rights. From and after the Effective Time, National City
and
the Surviving Corporation shall be entitled to treat such Old Certificates
that
have not yet been surrendered for exchange as evidencing the right to the
ownership of the Merger Consideration into which the shares of MAF Common Stock
represented by such Old Certificates may be converted, notwithstanding any
failure to surrender such Old Certificates. One hundred eighty (180) days
following the Effective Time, the Exchange Agent shall deliver to National
City
any shares of National City Common Stock and funds (including any interest
received with respect thereto) that National City has made available to the
Exchange Agent and which have not been disbursed to holders of Old Certificates,
and thereafter such holders shall be entitled to look to National City (subject
to abandoned property, escheat or other similar Laws) with respect to the Merger
Consideration deliverable or payable upon due surrender of their Old
Certificates, together with any dividends or other distributions as provided
in
Section 3.3(f) below. Neither Exchange Agent nor any Party shall be liable
to any holder of shares of MAF Common Stock for any shares of National City
Common Stock (or dividends, distributions or interest with respect thereto)
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Law.
(f) Distributions
with Respect to Unexchanged Certificates.
Whenever a dividend or other distribution is declared by National City on shares
of National City Common Stock, the record date for which is at or after the
Effective Time, the declaration shall include dividends or other distributions
on all shares issuable pursuant to this Agreement, provided that no dividends
or
other distributions declared or made with respect to shares of National City
Common Stock shall be paid to the holder of any unsurrendered Old Certificate
with respect to the shares of National City Common Stock represented thereby
until the holder of such Old Certificate shall surrender such Old Certificate
in
accordance with this Article III. Upon surrender of Old Certificate(s),
there shall be paid to the record holder of the Old Certificate(s) the amount
of
dividends, if any, without interest, less any taxes that may have been imposed
thereon with a record date after the Effective Time, which have become payable
with respect to the number of whole shares of National City Common Stock
represented by the Old Certificate(s).
National City shall pay any dividends or make any other distributions with
a
record date prior to the Effective Time that may have been declared or made
by
MAF on MAF Common Stock in accordance with the terms of this Agreement on or
prior to the Effective Time and which remain unpaid at the Effective
Time.
(g) Lost
or Destroyed Exchanged Certificates.
In the
event that any Old Certificate shall have been lost, stolen or destroyed, the
Exchange Agent shall deliver in exchange for such lost, stolen or destroyed
Old
Certificate, upon the making of an affidavit of
15
that
fact
by the holder thereof in form satisfactory to the Exchange Agent, the Merger
Consideration, as may be required pursuant to this Agreement; provided,
however,
that
the Exchange Agent may, in its sole discretion and as a condition precedent
to
the delivery of the Merger Consideration to which the holder of such Old
Certificate is entitled as a result of the Merger, require the owner of such
lost, stolen or destroyed Old Certificate to deliver a bond in such sum as
it
may direct as indemnity against any claim that may be made against MAF, National
City or the Exchange Agent or any other party with respect to the Old
Certificate alleged to have been lost, stolen or destroyed.
(h) Rights
With Respect to Unexchanged Certificates.
After
the Effective Time, holders of unsurrendered Old Certificates shall not have
any
rights as a stockholder of MAF, National City or the Surviving Corporation,
including, without limitation, the right to vote at any meeting of any such
entity’s stockholders.
(i) Closing
of MAF’s Transfer Books.
The
stock transfer books of MAF shall be closed at the close of business on the
Business Day immediately preceding the date of the Effective Time. In the event
of a transfer of ownership of shares of MAF Common Stock that is not registered
in the transfer records of MAF, the Merger Consideration to be distributed
pursuant to this Agreement may be delivered to a transferee, if an Old
Certificate is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by payment of any applicable
stock transfer taxes. National City and the Exchange Agent shall be entitled
to
rely upon the stock transfer books of MAF to establish the identity of those
Persons entitled to a notice and Letter of Transmittal pursuant to
Section 3.3(c) above and receive the Merger Consideration specified in this
Agreement for their shares of MAF Common Stock, which books shall be conclusive
with respect to the ownership of such shares. In the event of a dispute with
respect to the ownership of any such shares, National City and the Exchange
Agent shall be entitled to deposit any New Certificates not already delivered
representing such disputed shares in escrow and thereafter be relieved with
respect to any claims to such Merger Consideration.
3.4 Adjustments
to Prevent Dilution.
In the
event that MAF changes the number of shares of MAF Common Stock, or securities
convertible or exchangeable into or exercisable for shares of MAF Common Stock,
issued and outstanding prior to the Effective Time as a result of a
reclassification, stock split (including reverse stock split), stock dividend
or
distribution, recapitalization, subdivision, or similar transaction, the Merger
Consideration shall be adjusted accordingly.
IV.
REPRESENTATIONS AND WARRANTIES OF NATIONAL CITY
Except
as
disclosed in the National City Disclosure Letter, National City hereby
represents and warrants to MAF that:
4.1 Corporate
Organization.
National City is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware and is duly qualified to do
business as a foreign corporation in each jurisdiction in which its ownership
or
lease of property or the nature of the business conducted by it makes such
qualification necessary, except for such jurisdictions in which the failure
to
be so qualified would not have nor reasonably expected to
16
have,
individually or in the aggregate, a Material Adverse Effect. National City
is
registered as a financial holding company under the BHC Act. National City
has
the requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as it is now being conducted.
National City has delivered or made available to MAF true and complete copies
of
its certificate of incorporation and by-laws.
4.2 Authority.
National City has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation
of
the transactions contemplated herein have been duly approved by the Board of
Directors of National City and no other corporate proceedings on the part of
National City are necessary to authorize this Agreement or to consummate the
transactions so contemplated by this Agreement. This Agreement has been duly
executed and delivered by, and (assuming the due authorization, execution and
delivery of this Agreement by MAF) constitutes the valid and binding obligation
of National City enforceable against National City in accordance with its terms,
except as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other similar
Laws affecting the enforcement of creditors’ rights generally and except that
the availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought.
4.3 Capitalization.
As of
the date hereof, the authorized capital stock of National City consists of
1,400,000,000 shares of National City Common Stock and 5,000,000 shares of
National City preferred stock. As of the close of business on April 27,
2007, (i) 582,383,655 shares of National City Common Stock were validly
issued and outstanding, fully paid and nonassessable and (ii) 70,272 shares
of preferred stock were issued, outstanding, fully paid and nonassessable.
The
exercise price per share of any outstanding options to purchase shares of
National City Common Stock (“National
City Options”)
granted pursuant to stock option plans established by National City (a
“National
City Option Plan”)
was
determined based on the market value of such shares of National City Common
Stock at the time such National City Options were granted. As of the date
hereof, no National City Option (a) has a stated exercise price lower than
the market value (as then defined in the respective National City Option Plan
under which the National City Option was granted) for shares of the National
City Common Stock on the date of grant, or (b) has a grant date
“backdated.” As of the date hereof, except as set forth in this
Section 4.3, pursuant to the exercise of employee stock options under
National City’s various plans that authorize the issuance of stock options in
effect, National City’s dividend reinvestment plan and stock grants made
pursuant to National City’s various plans that authorize the issuance of stock
options, restricted stock and/or stock, there are no other shares of
capital
stock of National City authorized, issued or outstanding and there are no
outstanding subscriptions, options, warrants, rights, convertible securities
or
any other agreements or commitments of any character relating to the issued
or
unissued capital stock or other securities of National City obligating National
City to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock of National City or obligating National
City
to grant, extend or enter into any subscription, option, warrant, right,
convertible security or other similar agreement or commitment. As of the date
hereof, except as provided in this Agreement, there are no voting trusts or
other agreements or understandings to which National City or any National City
Subsidiary is a party with respect to the voting of the capital stock of
National
17
City.
All
of the shares of National City Common Stock issuable in exchange for shares
of
MAF Common Stock at the Effective Time in accordance with this Agreement
and all
of the shares of National City Common Stock issuable upon exercise of Converted
Options or payment of Converted RSUs will be, when so issued, duly authorized,
validly issued, fully paid and nonassessable and will not be subject to
preemptive rights.
4.4 Subsidiaries.
The
name and state of incorporation of each Significant Subsidiary of National
City
(each, a “National
City Significant Subsidiary”)
is set
forth in Section 4.4 of the National City Disclosure Letter. Each National
City Significant Subsidiary is a bank, a corporation, a limited liability
company or other business entity or association duly organized, validly existing
and in good standing (or the local Law equivalent) under the Laws of its
respective jurisdiction of incorporation or organization and is qualified to
do
business as a foreign corporation or foreign business entity in each
jurisdiction in which its ownership or lease of property or the nature of the
business conducted by it makes such qualification necessary, except for such
jurisdictions in which the failure to be so qualified would not have nor
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect. Each National City Significant Subsidiary has the requisite
corporate power and authority to own, lease and operate its properties and
assets and to carry on its businesses as they are now being conducted. All
outstanding shares of capital stock of each National City Significant Subsidiary
are owned by National City or a Subsidiary of National City (a “National
City Subsidiary”)
and
are validly issued, fully paid and (except pursuant to 12 USC Section 55 in
the case of each national bank Subsidiary) nonassessable, are not subject to
preemptive rights and are owned free and clear of all Liens. There are no
outstanding subscriptions, options, warrants, rights, convertible securities
or
any other agreements or commitments of any character relating to the issued
or
unissued capital stock or other securities of any National City Significant
Subsidiary obligating any National City Significant Subsidiary to issue, deliver
or sell, or cause to be issued, delivered or sold additional shares of its
capital stock or obligating any National City Significant Subsidiary to grant,
extend or enter into any subscription, option, warrant, right, convertible
security or other similar agreement or commitment.
4.5 Information
in Registration Statement and Proxy Statement.
None of
the information with respect to National City or any National City Subsidiary
provided by National City for inclusion in (i) the registration statement
to be filed with the SEC by National City on Form S-4 under the Securities
Act,
for the purpose of registering the shares of National City Common Stock to
be
issued in the Merger (the “Registration
Statement”)
and
(ii) any proxy statement of MAF (the “Proxy
Statement”)
required to be mailed to MAF’s stockholders in connection with the Merger will,
in the case of the Proxy Statement or any amendments or supplements
thereto, at the time of the mailing of the Proxy Statement and any amendments
or
supplements thereto, and at the time of the MAF Meeting, or, in the case of
the
Registration Statement, at the time it becomes effective, contain any untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they are made, not misleading. The Registration
Statement will comply as to form in all material respects with the provisions
of
the Securities Act and the rules and regulations promulgated
thereunder.
4.6 Consents
and Approvals; No Violation.
Neither
the execution and delivery of this Agreement by National City nor the
consummation by National City of the transactions
18
contemplated
hereby will (a) conflict with or result in any breach of any provision of
its certificate of incorporation or by-laws of National City, (b) violate,
conflict with, constitute a default (or an event which, with notice or lapse
of
time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in the creation of
any
Lien upon any of the properties or assets of National City or any National
City
Subsidiary under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which National City or any National City Subsidiary
is a party or to which they or any of their respective properties or assets
are
subject, except for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of Liens, which will not have nor
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect, or (c) require any consent, approval, authorization or
permit of or from, or filing with or notification to, any Governmental
Authority, except (i) pursuant to the Exchange Act and the Securities Act,
(ii) filing the Delaware Certificate of Merger, (iii) filings with,
and approval by, the FRB, (iv) filings with, and approvals by the OTS,
(v) filings with, and approvals required under securities or blue sky Laws
of the various states (vi) filings with, and approvals by, state regulatory
agencies (including, but not limited to, other state bank and insurance
regulatory agencies) as may be required (collectively, the “State
Entities”),
(vii) filings and approvals pursuant to any applicable state takeover Law,
or (ix) consents, approvals, authorizations, permits, filings or
notifications which, if not obtained or made will not have nor reasonably
expected to have, individually or in the aggregate, a Material Adverse
Effect.
4.7 Reports
and Financial Statements.
(a) Since
January 1, 2002, National City and each National City Subsidiary have
timely filed all reports, registrations and statements, together with any
required amendments thereto, that they were required to file with the SEC under
Sections 12(b), 12(g), 13(a) or 14(a) of the Exchange Act, including, but
not limited to, Forms 10-K, Forms 10-Q and proxy statements (the “National
City Reports”).
National City has delivered or made available to MAF true and complete copies
of
each of National City’s annual reports on Form 10-K for fiscal years 2002
through 2006. As of their respective dates, the National City Reports complied
with the requirements of the Exchange Act and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstance under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial statements
of
National City included in the National City Reports (i) have been prepared
in accordance with U.S. GAAP applied
on a consistent basis (except as may be indicated therein or in the notes
thereto) and (ii) fairly present the consolidated financial position of
National City and National City Subsidiaries taken as a whole as at the dates
thereof and the consolidated results of their operations and cash flows for
the
periods then ended subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments and any other adjustments described
therein. There exist no material liabilities of National City and its
consolidated Subsidiaries, contingent or otherwise of a type required to be
disclosed in accordance with U.S. GAAP as in effect as of the respective dates
of such financial statements, except as disclosed in the National City Reports.
19
(b) National
City has delivered or made available to MAF true and complete copies of an
unaudited consolidated income statement of National City for the period of
January 1, 2007 through March 31, 2007 and unaudited consolidated
balance sheet of National City as of March 31, 2007 (the “National
City Unaudited Interim Financial Information”).
The
National City Unaudited Interim Financial Information (i) has been
accurately derived from the books and records of National City, (ii) fairly
presents, in all material respects, the financial condition and the results
of
operations of National City and National City Subsidiaries taken as a whole
as
of the respective dates and for the periods indicated, and (iii) were
prepared on a basis consistent with the accounting principles and practices
that
National City used to prepare its periodic income and financial statements
for
its quarterly report on Form 10-Q for September 30, 2006, except for new
accounting standards that were adopted subsequent to September 30, 2006,
and prior to March 31, 2007. National City’s reserve for possible loan
losses as shown in the National City Unaudited Interim Financial Information
was
adequate, within the meaning of U.S. GAAP and safe and sound banking
practices.
4.8 Taxes.
National City has delivered or made available to MAF true and correct copies
of
the Tax Returns filed by National City and each National City Subsidiary for
each of the fiscal years that remains open, as of the date hereof, for
examination or assessment of Tax. National City and each National City
Subsidiary have prepared in good faith and duly and timely filed, or caused
to
be duly and timely filed, all Tax Returns required to be filed by them on or
before the date hereof, except to the extent that all such failures to file,
would not have nor reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect. National City and each National City
Subsidiary have paid, or have made adequate provision or set up an adequate
accrual or reserve, within the meaning of U.S. GAAP, for the payment of, all
Taxes, shown or required to be shown to be owing on all such Tax Returns,
together with any interest, additions or penalties related to any such Taxes
or
to any open taxable year or period. Neither National City nor any National
City
Subsidiary has consented to extend the statute of limitations with respect
to
the assessment of any Tax. Neither National City nor any National City
Subsidiary is a party to any Action, nor to the Knowledge of National City,
is
any such Action threatened, by any Governmental Authority in connection with
the
determination, assessment or collection of any Taxes, and no deficiency notices
or reports have been received by National City or any National City Subsidiary
in respect of any material deficiencies for any Tax.
4.9 Employee
Plans.
(a) All
employee benefit, welfare, bonus, deferred compensation, pension, profit
sharing, stock option, employee stock ownership, consulting, severance, or
fringe benefit plans, formal or informal, written or oral, and all trust
agreements related thereto, relating to any present or former directors,
officers or employees of National City or any National City Subsidiary
(collectively, the “National
City Employee Plans”)
have
been maintained, operated, and administered in compliance with their terms
in
all material respects and currently comply, and have at all relevant times
complied, in all material respects with the applicable requirements of ERISA,
the Code, and any other applicable Laws.
(b) With
respect to each National City Employee Plan that is a pension plan (as defined
in Section 3(2) of ERISA) (i) except for recent amendment(s) to the
plans not
20
materially
affecting the qualified status of the plans (which are disclosed in, and copies
of which are attached to, Section 4.9(b) of the National City Disclosure
Letter), each pension plan as amended (and any trust relating thereto) intended
to be a qualified plan under Section 401(a) of the Code, either
(A) has been determined by the IRS to be so qualified, (B) is the
subject of a pending application for such determination that was timely filed,
or (C) will be submitted for such a determination prior to the end of the
“remedial amendment period” within the meaning of Section 401(b) of the
Code, (ii) there is no accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not
waived, and no waiver of the minimum funding standards of such sections has
been
requested from the IRS, (iii) neither National City nor any National City
Subsidiary has provided, or is required to provide, security to any pension
plan
pursuant to Section 401(a)(29) of the Code, (iv) no reportable event
described in Section 4043 of ERISA for which the thirty (30) day reporting
requirement has not been waived has occurred, (v) no defined benefit plan
has been terminated without first receiving a determination letter from the
IRS,
nor has the PBGC instituted proceedings to terminate a defined benefit plan
or
to appoint a trustee or administrator of a defined benefit plan, and no
circumstances exist that constitute grounds under Section 4042(a)(2) of
ERISA entitling the PBGC to institute any such proceedings, and (vi) no
pension plan is a “multiemployer plan” within the meaning of Section 3(37)
of ERISA or a “multiple employer plan” within the meaning of 413(c) of the
Code.
(c) Neither
National City nor any National City Subsidiary has incurred any liability to
the
PBGC with respect to any “single employer plan” within the meaning of
Section 4001(a)(15) of ERISA currently or formerly maintained by any Person
considered one employer with it under Section 4001 of ERISA or
Section 414 of the Code, except for premiums all of which have been paid
when due. Neither National City nor any National City Subsidiary has incurred
any withdrawal liability with respect to a multiemployer plan under Subtitle
E
of Title IV of ERISA. To the Knowledge of National City, there is no basis
for
any Person to assert that National City or any National City Subsidiary has
an
obligation to institute any Employee Plan or any such other arrangement,
agreement or plan.
(d) With
respect to any insurance policy that heretofore has or currently does provide
funding for benefits under any National City Employee Plan, (i) as of the
date hereof, there is no material liability on the part of National City or
any
National City Subsidiary in the nature of a retroactive or retrospective rate
adjustment, loss sharing arrangement, or other actual or contingent liability,
nor would there be any such liability if such insurance policy was terminated,
and (ii) no insurance company issuing such policy is in receivership,
conservatorship, liquidation or similar proceeding and, to the Knowledge of
National City, no such proceeding with respect to any such insurer is
imminent.
(e) Neither
the execution of this Agreement, nor the consummation of the transactions
contemplated hereby will (i) constitute a stated triggering event under any
National City Employee Plan that will result in any payment (whether of
severance pay or otherwise) becoming due from National City or any National
City
Subsidiary to any present or former officer, employee, director, stockholder,
consultant or dependent of any of the foregoing or (ii) accelerate the time
of payment or vesting, or increase the amount of compensation due to any present
or former officer, employee, director, stockholder, consultant, or dependent
of
any of the foregoing.
21
(f) Neither
National City nor any National City Subsidiary has any obligations for retiree
health and life benefits under any National City Employee Plan, program or
contract. There are no restrictions on the rights of National City or any
National City Subsidiary to amend or terminate any such National City Employee
Plan without incurring any liability thereunder.
4.10 Material
Contracts.
Except
as disclosed in the National City Reports or Section 6.5(g) of the Agreement,
neither National City nor any National City Subsidiary is a party to, or is
bound or affected by, or receives benefits under (a) any employment,
severance, termination, consulting or retirement agreement (collectively,
“Benefit
Agreements”)
that
was required to be filed with the SEC pursuant to Item 402 of Regulation S-K
of
the Exchange Act, (b) any material agreement, indenture or other instrument
relating to the borrowing of money by National City or any National City
Subsidiary or the guarantee by National City or any National City Subsidiary
of
any such obligation (other than trade payables and instruments relating to
borrowings or guaranties made in the ordinary course of business) or
(c) any other contract or agreement or amendment thereto that would be
required to be filed as an exhibit to a Form 10-K filed by National City with
the SEC as of the date thereof (each, a “National
City Contract”).
National City has delivered or made available to MAF a correct and complete
copy
of each National City Contract, together with all amendments and supplements
thereto. Neither National City nor any National City Subsidiary is in default
under any National City Contract, which default is reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect, and there
has not occurred any event that with the lapse of time or the giving of notice
or both would constitute such a default.
4.11 [Reserved].
4.12 Litigation.
Except
as disclosed in the National City Reports, there is no Action pending, or,
to
the Knowledge of National City, threatened against or affecting National City
or
any National City Subsidiary that, if decided adversely to National City or
any
applicable National City Subsidiary, would be reasonably expected to result
in a
Material Adverse Effect, nor is there any Governmental Order outstanding against
National City or any of National City Subsidiary having, or which would, to
the
Knowledge of National City, now or in the future have, or would reasonably
be
expected to have a Material Adverse Effect.
4.13 Compliance
with Laws.
(a) National
City and each National City Subsidiary hold all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to each, and have complied in all respects with
and are not in default in any respect under any, applicable Law, and
implementing rules, regulations or publicly-issued statements of policy of
any
Governmental Authority relating to National City or any National City
Subsidiary, except where the failure to hold such license, franchise, permit
or
authorization or such noncompliance or default is not reasonably likely to
have,
either individually or in the aggregate, a Material Adverse Effect.
(b) Except
as
disclosed in the National City Reports, the businesses of National City and
each
National City Subsidiary are not being conducted in violation of any
22
applicable
Law or Governmental Order (including, without limitation, in the case of a
National City Subsidiary that is a bank, all applicable Laws pertaining to
the
conduct of the banking business and the exercise of trust powers), except for
violations that individually or in the aggregate do not, and, to the Knowledge
of National City, will not, have a Material Adverse Effect. To the Knowledge
of
National City, any National City Subsidiary that is a bank is not in violation
of those Laws applicable to depository institutions, and corresponding
regulations and publicly-issued statements of policy of any Governmental
Authority relating to the Community Reinvestment Act (“CRA”), privacy
Laws, the Bank Secrecy Act, as amended (the “BSA”), or anti-money
laundering statutes in a manner that would materially delay the receipt of
approvals of Governmental Authorities required to consummate the transactions
contemplated in this Agreement. Other than regulatory examinations conducted
in
the ordinary course, no investigation or review by any Governmental Authority
with respect to National City or any National City Subsidiary is pending or,
to
the Knowledge of National City, threatened, nor has any Governmental Authority
indicated an intention to conduct the same in each case other than those the
outcome of which will not have nor reasonably expected to have, individually
or
in the aggregate, a Material Adverse Effect.
(c) Except
as
is not reasonably likely to have, either individually or in the aggregate,
a
Material Adverse Effect, National City and each National City Subsidiary have
properly administered all accounts for which it acts as a fiduciary, including
accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance
with
the terms of the governing documents, applicable Laws and common law. None
of
National City, any National City Subsidiary, or any director, officer or
employee of National City or of any National City Subsidiary, has committed
any
breach of trust or fiduciary duty with respect to any such fiduciary account
that is reasonably likely to have, either individually or in the aggregate,
a
Material Adverse Effect, and the accountings for each such fiduciary account
are
true and correct and accurately reflect the assets of such fiduciary account
except as would not be reasonably likely to have, either individually or in
the
aggregate, a Material Adverse Effect.
4.14 Agreements
with Regulators, Etc.
Neither
National City nor any National City Subsidiary is a party to any written
agreement or memorandum of understanding with, or a party to any commitment
letter with, board resolution or similar undertaking to, or is a recipient
of
any extraordinary
supervisory letter from, or is subject to any other Governmental Order by,
any
Governmental Authority, which (i) restricts materially the conduct of its
business, (ii) may materially delay the receipt of approvals of
Governmental Authorities required to consummate the transactions contemplated
by
this Agreement, or (iii) in any manner relates to its capital adequacy, its
credit or reserve policies or its management, nor has National City been advised
by any Governmental Authority that it is contemplating issuing or requesting
(or
is considering the appropriateness of issuing or requesting) any such agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter
or other Governmental Order. Neither National City nor any National City
Subsidiary is required by Section 32 of the Federal Deposit Insurance Act,
as amended (“FDIA”)
to
give prior notice to a Federal banking agency of the proposed addition of any
individual to its Board of Directors or the employment of an individual as
a
senior executive officer. To the Knowledge of National City, there is no reason
why the regulatory approvals referred to in Section 4.6(c) above should not
be obtained.
23
4.15 National
City Ownership of MAF Common Stock.
As of
the date of this Agreement, neither National City nor any of its Affiliates
(i) beneficially owns, directly or indirectly, or (ii) are parties to
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, MAF Common Stock (other than DPC Shares or
Trust Account Shares), which in the aggregate, represent five percent (5%)
or
more of the outstanding shares of MAF Common Stock.
4.16 Financial
Advisors.
Neither
National City nor any National City Subsidiary has paid or will become obligated
to pay any fee or commission to any broker, finder, intermediary or any other
Person in connection with, or as a result of, the transactions contemplated
by
this Agreement.
4.17 National
City Action.
The
Board of Directors of National City (at a meeting duly called, constituted
and
held) has by the requisite vote of all directors present (i) determined
that the Merger is advisable and in the best interests of National City and
its
stockholders and (ii) approved this Agreement and the transactions
contemplated hereby, including the Merger.
4.18 Environmental
Matters.
To the
Knowledge of National City, (i) neither National City nor any National City
Subsidiary is in material violation of or has any material liability, absolute
or contingent, in connection with or under any Environmental Law, except any
such violations or liabilities which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; (ii) the
condition of the Loan Portfolio Properties, Trust Properties and Other
Properties of National City or a National City Subsidiary does not constitute
a
violation of or has not resulted in any liability, absolute or contingent to
National City or any National City Subsidiary, under any Environmental Law,
except any such violations or liabilities which would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect; and
(iii) there are no Actions pending or, to the Knowledge of National City,
threatened relating to any Loan Portfolio Properties, Trust Properties and
Other
Properties, including, without limitation, any notices, demand letters or
requests for information from any federal or state environmental agency relating
to any such liability under or violation of Environmental Law, which would
impose a liability upon National City or any National City Subsidiary pursuant
to any Environmental Law, except such as would not, individually or in the
aggregate
have a Material Adverse Effect. This Section 4.18 contains the sole and
exclusive representations and warranties of National City related to
Environmental Laws and Hazardous Substances.
4.19 Labor
Matters.
(a) Neither National City nor any National City Subsidiary is engaged in,
or has engaged in, any unfair labor practice; (b) there is no labor strike,
dispute, slowdown or stoppage actually pending, threatened against or
directly affecting National City or any National City Subsidiary; (c) no
union is currently certified, and there is no union representation question
and
no union or other organizational activity that would be subject to the National
Labor Relations Act (29 U.S.C. Section 151 et seq.) exists or is
threatened; (d) no grievance or arbitration proceeding arising out of or
under collective bargaining agreements is pending and no claims therefore exist,
or to the Knowledge of National City, are threatened; (e) no collective
bargaining agreement exists that is binding on National City and/or any National
City Subsidiary; (f) neither National City nor any National City Subsidiary
has experienced any material work stoppage or other material labor
difficulty; and (g) neither
24
National
City nor any National City Subsidiary is delinquent in any material payments
to
any of its current or former officers, directors, employees or agents for any
wages, salaries, commissions, bonuses, benefits or other compensation for any
services performed by them or amounts required to be reimbursed to
them.
4.20 ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act.
National City is in compliance with the provisions, including Section 404,
of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and the certifications provided pursuant to
Sections 302 and 906 thereof were accurate as of the date such
certifications were made and such future certifications to be provided pursuant
to Sections 302 and 906 will be accurate as of the date such certifications
are
made.
4.21 Tax
Treatment.
As of
the date hereof, to the Knowledge of National City, there is no reason why
the
Merger will fail to qualify as a reorganization under Section 368(a) of the
Code.
4.22 Notice
of Breach or Potential Breach.
National City shall promptly notify MAF of any change, circumstance or event
which would cause any of the representations or warranties made by National
City
pursuant to this Agreement to be untrue as of the date hereof or at the Closing
Date or which prevents National City from complying with any of its obligations
hereunder. There is no fact or development known to National City which would
have or reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect on National City’s or any National City Subsidiary’s
continuing business, which has not been set forth in this Agreement or the
National City Disclosure Letter.
4.23 Disclosure.
No
representation or warranty by National City in this Agreement after giving
effect to the totality of the disclosures set forth in the National City
Disclosure Letter, contains any untrue statement of a material fact or omits
to
state a material fact required to be stated herein or therein or necessary
to
make any statement herein or therein not materially misleading. Any claim by
MAF
of a breach of representation, warranty, covenant, agreement or obligation
of
National City hereunder will not be affected by any investigation conducted
by
MAF with respect to, or knowledge acquired (or capable of being acquired),
with
respect to the accuracy
or inaccuracy of or compliance with any such representation, warranty, covenant,
agreement or obligation.
V.
REPRESENTATIONS AND WARRANTIES OF MAF
Except
as
disclosed in the MAF Disclosure Letter, MAF hereby represents and warrants
to
National City that:
5.1 Corporate
Organization.
(a) MAF.
MAF is
a corporation duly organized, validly existing and in good standing under the
Laws of the State of Delaware and is duly qualified to do business as a foreign
corporation in each jurisdiction in which its ownership or lease of property
or
the nature of the business conducted by it makes such qualification necessary,
except for such jurisdictions in which the failure to be so qualified would
not
have or would reasonably be expected not to have, individually or in the
aggregate, a Material Adverse Effect. MAF is registered as a unitary savings
and
loan holding company under HOLA. MAF has the requisite corporate power and
25
authority
to own, lease and operate its properties and assets and to carry on its business
as it is now being conducted. MAF has delivered or made available to National
City true and complete copies of its certificate of incorporation and
by-laws.
(b) MAF
Bank.
MAF
Bank is a federally-chartered stock savings bank organized with valid corporate
existence under the Laws of the United States of America.
5.2 Authority.
MAF has
the requisite corporate power and authority to execute and deliver this
Agreement and, except for the requisite approval of MAF’s stockholders set forth
in Section 5.17 of this Agreement, to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement
and
the consummation of the transactions contemplated herein have been duly approved
by the Board of Directors of MAF and no other corporate proceedings on the
part
of MAF are necessary to authorize this Agreement or to consummate the
transactions so contemplated by this Agreement, subject only to approval by
the
stockholders of MAF as provided in Section 5.17 below. This Agreement has
been duly executed and delivered by, and (assuming the due authorization,
execution and delivery of this Agreement by National City) constitutes the
valid
and binding obligation of MAF enforceable against MAF in accordance with its
terms, except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and
other similar Laws affecting the enforcement of creditors’ rights generally and
except that the availability of the equitable remedy of specific performance
or
injunctive relief is subject to the discretion of the court before which any
proceedings may be brought.
5.3 Capitalization.
The
authorized capital stock of MAF consists of (a) 80,000,000 shares of MAF
Common Stock, and (b) 5,000,000 shares of MAF preferred stock, par value
$.01 per share (“MAF
Preferred Stock”).
As of
the close of business on April 27, 2007, 32,933,888 shares of MAF Common
Stock were validly issued and outstanding, fully paid and nonassessable, and
there are no shares of MAF Preferred Stock issued or outstanding. As of the
date
of this Agreement, there were outstanding under MAF Option Plans options to
purchase 3,046,838
shares of MAF Common Stock, which MAF Options had a weighted average exercise
price of $33.88 and for which adequate shares of MAF Common Stock have been
reserved for issuance under the MAF Option Plans. There are 120,620 RSUs
outstanding on the date hereof. Section 5.3 of the MAF Disclosure Letter
sets forth as of the close of business on the date of this Agreement, with
respect to each MAF Option, a true, accurate complete list of (i) the name
of each optionee for the MAF Option (each, an “Optionee”),
(ii) the number of shares of MAF Common Stock the Optionee has the right to
purchase under the MAF Option, (iii) the exercise price for the MAF Option
and (iv) the date the MAF Option was granted to the Optionee. The exercise
price per share of MAF Common Stock under the MAF Options was determined based
on the market value of such shares of MAF Common Stock on the date such MAF
Options were granted. No MAF Option (x) has a stated exercise price lower
than the market value (as then defined in the respective MAF Option Plan under
which the MAF Option was granted) on the grant date of the MAF Option, or
(y) has a grant date “backdated.” Except as set forth in this
Section 5.3, there are no shares of capital stock of (or any other type of
equity interest in) MAF that are authorized, issued or outstanding, and there
are no outstanding subscriptions, options, warrants, rights, convertible
securities or any other agreements (including, without limitation, restricted
stock award agreements) or commitments of any character relating to the issued
or unissued capital stock or other securities of MAF obligating MAF to issue,
deliver or sell, or
26
cause
to
be issued, delivered or sold, additional shares of capital stock of MAF or
obligating MAF to grant, extend or enter into any subscription, option, warrant,
right, convertible security or other similar agreement or commitment. There
are
no voting trusts or other agreements or understandings to which MAF or any
MAF
Subsidiary is a party with respect to the voting of the capital stock of MAF.
5.4 Subsidiaries.
Section 5.4 of the MAF Disclosure Letter sets forth with respect to each
Subsidiary of MAF (each, a “MAF
Subsidiary”)
the
(i) name of the MAF Subsidiary, (ii) state of incorporation or
organization of the MAF Subsidiary, (iii) the owners and their respective
ownership interests in the MAF Subsidiary and (iv) the primary activities
of the MAF Subsidiary and the primary activities the MAF Subsidiary is engaged
in as of the date hereof. Each MAF Subsidiary is a savings bank, a corporation,
a limited liability company or other business entity or association duly
organized, validly existing and in good standing (or the local Law equivalent)
under the Laws of its respective jurisdiction of incorporation or organization
and is qualified to do business as a foreign corporation or foreign business
entity or association in each jurisdiction in which its ownership or lease
of
property or the nature of the business conducted by it makes such qualification
necessary, except for such jurisdictions in which the failure to be so qualified
would not have nor reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect. Each MAF Subsidiary has the requisite
corporate power and authority to own, lease and operate its properties and
assets and to carry on its businesses as they are now being conducted. All
outstanding shares of capital stock of each MAF Subsidiary are owned by MAF
or a
MAF Subsidiary and are validly issued, fully paid and nonassessable, are not
subject to preemptive rights and are owned free and clear of all Liens. There
are no outstanding subscriptions, options, warrants, rights, convertible
securities or any other agreements or commitments of any character relating
to
the issued or unissued capital stock or other securities of any MAF Subsidiary
obligating any MAF Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold additional shares of its capital stock or obligating any
MAF
Subsidiary to grant, extend or enter into any subscription, option, warrant,
right, convertible security or other similar agreement or
commitment.
5.5 Information
in Registration Statement and Proxy Statement.
None of
the information with respect to MAF or any MAF Subsidiary provided by MAF for
inclusion in the Proxy Statement or the Registration Statement will, in the
case
of the Proxy Statement or any amendments or supplements thereto, at the time
of
the mailing of the Proxy Statement and any amendments or supplements thereto,
and at the time of the MAF Meeting, or, in the case of the Registration
Statement, at the time it becomes effective, contain any untrue statement of
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The information
provided by MAF for inclusion in the Proxy Statement or the Registration
Statement will comply as to form in all material respects with the provisions
of
the Exchange Act.
5.6 Consents
and Approvals.
Neither
the execution and delivery of this Agreement by MAF nor the consummation by
MAF
of the transactions contemplated hereby will (a) conflict with or result in
any breach of any provision of its certificate of incorporation or by-laws
of
MAF, (b) violate, conflict with, constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the
27
performance
required by, or result in the creation of any Lien upon any of the properties
or
assets of MAF or any MAF Subsidiary under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which MAF or any MAF
Subsidiary is a party or to which they or any of their respective properties
or
assets are subject, except for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of Liens, which will not have nor
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect, or (c) require any consent, approval, authorization or
permit of or from, or filing with or notification to, any Governmental
Authority, except (i) pursuant to the Exchange Act and the Securities Act,
(ii) filing the Delaware Certificate of Merger, (iii) filings required
under the securities or blue sky Laws of the various states, (iv) filings
with, and approval by, the FRB, (v) filings with, and approval by, the OTS,
(vi) filings with, and approvals by, the State Entities, (vii) filings
and approvals pursuant to any applicable state takeover Law, or
(viii) consents, approvals, authorizations, permits, filings or
notifications which, if not obtained or made will not have nor reasonably
expected to have, individually or in the aggregate, have a Material Adverse
Effect.
5.7 Reports
and Financial Statements.
(a) Since
January 1, 2002, MAF and each MAF Subsidiary have timely filed all reports,
registrations and statements, together with any amendments thereto, that they
were required to file with the SEC under Sections 12(b), 12(g), 13(a) or
14(a) of the Exchange Act, including, but not limited to Forms 10-K, Forms
10-Q
and proxy statements (the “MAF
Reports”).
MAF
has delivered or made available to National City true and complete copies of
each of MAF’s annual reports on Form 10-K for fiscal years 2002 through 2006. As
of their respective dates, the MAF Reports complied with the requirements of
the
Exchange Act and did not contain any untrue statement of a material fact or
omit
to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstance under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial statements
of
MAF included in the MAF Reports (i) have been prepared in accordance with
U.S. GAAP applied on a consistent basis (except as may be indicated therein
or
in the notes thereto), (ii) fairly present the financial position of MAF
and MAF Subsidiaries taken as a whole as at the respective dates thereof and
the
consolidated results of their operations and cash flows for the respective
periods then ended subject, in the case of the unaudited interim financial
statements, to normal year end and audit adjustments and any other adjustments
described therein, and (iii) MAF has prepared an impairment analysis of the
Real
Estate on the balance sheet of MAF Developments, Inc. relating to the Springbank
Project as of March 31, 2007, consistent
with U.S. GAAP. The results of the impairment analysis indicate that MAF’s
investment in the Springbank Project will be fully recovered over the life
of
the project. Since January 1, 2002, neither MAF nor any MAF Subsidiary has
incurred any liability, contingent or otherwise of a type required to be
disclosed in accordance with U.S. GAAP as in effect as of the respective dates
of such financial statements, except as disclosed in the MAF
Reports.
(b) MAF
has
delivered or made available to National City true and complete copies of an
unaudited income statement of MAF for the period of January 1, 2007 until
March 31, 2007 and an unaudited balance sheet of MAF as of March 31,
2007 (the “MAF
Unaudited Interim Financial Information”).
The
MAF Unaudited Interim Financial Information
28
(i) has
been accurately derived from the books and records of MAF, (ii) fairly
presents, in all material respects, the financial condition and the results
of
operations of MAF and the MAF Subsidiaries taken as a whole as of the respective
dates and for the periods indicated, and (iii) were prepared on a basis
consistent with the accounting principles and practices that MAF used to
prepare
its periodic income and financial statements for its quarterly report on
Form
10-Q for September 30, 2006, except for new accounting standards that were
adopted subsequent to September 30, 2006 and prior to March 31, 2007.
MAF’s reserve for possible loan losses as shown in the MAF Unaudited Interim
Financial Information was adequate, within the meaning of U.S. GAAP and safe
and
sound banking practices.
5.8 Taxes.
MAF has
delivered or made available to National City true and correct copies of the
Tax
Returns filed by MAF and each MAF Subsidiary as listed in Section 5.8 of the
MAF
Disclosure Letter. MAF and each MAF Subsidiary have prepared in good faith
and
duly and timely filed, or caused to be duly and timely filed, all Tax Returns
required to be filed by them on or before the date hereof, except to the extent
that all such failures to file, taken together, would not have nor reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect.
MAF and each MAF Subsidiary have paid, or have made adequate provision or set
up
an adequate accrual or reserve, within the meaning of U.S. GAAP, for the payment
of, all Taxes shown to be owing on all such Tax Returns, together with any
interest, additions or penalties related to any such Taxes or to any open
taxable year or period. Neither MAF nor any MAF Subsidiary has consented to
extend the statute of limitations with respect to the assessment of any Tax.
Neither MAF nor any MAF Subsidiary is a party to any Action, nor to the
Knowledge of MAF, is any such Action threatened, by any Governmental Authority
in connection with the determination, assessment or collection of any Taxes,
and
no deficiency notices
or reports have been received by MAF or any MAF Subsidiary in respect of any
material deficiencies for any Tax.
5.9 Employee
Plans.
(a) All
employee benefit, welfare, bonus, deferred compensation, pension, profit
sharing, stock option, employee stock ownership, consulting, severance, or
fringe benefit plans, formal or informal, written or oral and all trust
agreements related thereto, relating to any present or former directors,
officers or employees of MAF or a MAF Subsidiary (collectively, the
“MAF
Employee Plans”)
have
been maintained, operated, and administered in compliance with their terms
in
all material respects and currently comply, and have at all relevant times
complied, in all material respects with the applicable requirements of ERISA,
the Code, and any other applicable Laws.
(b) With
respect to each MAF Employee Plan which is a pension plan (as defined in
Section 3(2) of ERISA) (i) except for recent amendment(s) to the plans
not materially affecting the qualified status of the plans (which are disclosed
in, and copies of that are attached to, Section 5.9(b) of the MAF Disclosure
Letter), each pension plan as amended (and any trust relating thereto) intended
to be a qualified plan under Section 401(a) of the Code (such plans
identified on said Section 5.9(b) of the MAF Disclosure Letter as the
“MAF
Qualified Plans”)
either
(A) has been determined by the IRS to be so qualified, (B) is the
subject of a pending application for such determination that was timely filed,
or (C) will be submitted for such a determination prior to the end of the
“remedial amendment period” within the meaning of
29
Section 401(b)
of the Code, (ii) there is no accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not
waived, and no waiver of the minimum funding standards of such sections has
been
requested from the IRS, (iii) neither MAF nor any of MAF Subsidiary has
provided, or is required to provide, security to any pension plan pursuant
to
Section 401(a)(29) of the Code, (iv) the fair market value of the
assets of each defined benefit plan (as defined in Section 3(35) of ERISA)
intended to be qualified under Section 401(a) of the Code exceeds the value
of the “benefit liabilities” within the meaning of Section 4001(a)(16) of
ERISA under such defined benefit plan as of the end of the most recent plan
year
thereof ending prior to the date hereof, calculated on the basis of the
actuarial assumptions used in the most recent actuarial valuation for such
defined benefit plan as of the date hereof, (v) no reportable event
described in Section 4043 of ERISA for which the thirty (30) day reporting
requirement has not been waived has occurred, (vi) no defined benefit plan
intended to be qualified under Section 401(a) of the Code has been
terminated without first receiving a determination letter from the IRS, nor
has
the PBGC instituted proceedings to terminate a defined benefit plan or to
appoint a trustee or administrator of a defined benefit plan, and no
circumstances exist that constitute grounds under Section 4042(a)(2) of
ERISA entitling the PBGC to institute any such proceedings, and (vii) no
pension plan is a “multiemployer plan” within the meaning of Section 3(37)
of ERISA or a “multiple employer plan” within the meaning of 413(c) of the
Code.
(c) Neither
MAF nor any MAF Subsidiary has incurred any liability to the PBGC with respect
to any “single employer plan” within the meaning of Section 4001(a)(15) of
ERISA currently or formerly maintained by any Person considered one employer
with it under Section 4001
of ERISA or Section 414 of the Code, except for premiums all of which have
been paid when due. Neither MAF nor any MAF Subsidiary has incurred any
withdrawal liability with respect to a multiemployer plan under Subtitle E
of
Title IV of ERISA. To the Knowledge of MAF, there is no basis for any Person
to
assert that MAF or any MAF Subsidiary has an obligation to institute any MAF
Employee Plan or any such other arrangement, agreement or plan.
(d) With
respect to any insurance policy that heretofore has or currently does provide
funding for benefits under any MAF Employee Plan, (i) as of the date
hereof, there is no material liability on the part of MAF or any MAF Subsidiary
in the nature of a retroactive or retrospective rate adjustment, loss sharing
arrangement, or other actual or contingent liability, nor would there be any
such liability if such insurance policy was terminated, and (ii) no
insurance company issuing such policy is in receivership, conservatorship,
liquidation or similar proceeding and, to the Knowledge of MAF, no such
proceeding with respect to any such insurer is imminent.
(e) Neither
the execution of this Agreement, nor the consummation of the transactions
contemplated hereby will (i) constitute a stated triggering event under any
MAF Employee Plan that will result in any payment (whether of severance pay
or
otherwise) becoming due from MAF or any MAF Subsidiary to any present or former
officer, employee, director, stockholder, consultant or dependent of any of
the
foregoing or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due to any present or former officer, employee,
director, stockholder, consultant, or dependent of any of the foregoing. Neither
MAF nor any MAF Subsidiary has any obligations for retiree health and life
benefits
30
under
any
MAF Employee Plan, program or contract. To the Knowledge of MAF, there are
no
restrictions on the rights of MAF or MAF Subsidiaries to amend or terminate
any
such MAF Employee Plan without incurring any liability thereunder.
(f) Section 5.9(f)(i)
of the MAF Disclosure Letter identifies each MAF Employee Plan that is
non-qualified, including those deferred compensation plans identified as the
“MAF Deferred Compensation Plans” (collectively, the “MAF
Non-Qualified Plans”),
and
Section 5.9(f)(ii) of the MAF Disclosure Letter identifies each MAF
Non-Qualified Plan that has a trust for the benefit of the participants of
the
MAF Non-Qualified Plan. MAF and each applicable MAF Subsidiary have accrued
expenses, on a basis consistent with U.S. GAAP, for the value of all of the
required distributions due and owing or expected to become due and owing under
any MAF Non-Qualified Plans as of the end of the most recent fiscal quarter
and
any trust maintained by MAF for the benefit of the participants in a MAF
Non-Qualified Plan has adequate balances to pay any and all “benefit
liabilities” due.
(g) Neither
the execution of this Agreement nor the undertaking or consummation of any
transaction contemplated by this Agreement shall (i) constitute a partial
termination of the MAF Bank Employee Stock Ownership Plan (the “ESOP”)
or
otherwise require or compel the termination of the ESOP or (ii) prevent or
impose limitations on or otherwise restrict National City’s ability to assume,
continue, maintain, administer, terminate or take any other action with respect
to any MAF Employee Benefit Plan, including, but not limited to, the ESOP.
There
are no outstanding loan obligations under the ESOP.
5.10 Material
Contracts.
Except
as disclosed in the MAF Reports, or the agreements referenced in Section 6.5(g)
of this Agreement, neither MAF nor any MAF Subsidiary is a party to, or is
bound
or affected by, or receives benefits under (a) any Benefit Agreements
providing for aggregate payments to any Person in any calendar year in excess
of
$100,000, (b) any material agreement, indenture or other instrument
relating to the borrowing of money by MAF or any MAF Subsidiary or the guarantee
by MAF or any MAF Subsidiary of any such obligation (other than trade payables
and instruments relating to transactions entered into in the ordinary course
of
business), (c) any other contract or agreement or amendment thereto that
would be required to be filed as an exhibit to a Form 10-K filed by MAF with
the
SEC as of the date of this Agreement, or (d) any contract, agreement, plan,
policy or understanding that by its terms is affected (including, but not
limited to accelerated vesting or payment, setting of benefits, change in
payment, or establishing benefits or payments) as a result of a change in
control (each, an “MAF
Contract”).
MAF
has delivered or made available to National City a correct and complete copy
of
each MAF Contract, together with all amendments and supplements thereto. Neither
MAF nor any MAF Subsidiary is in default under any MAF Contract, which default
is reasonably likely to have, either individually or in the aggregate, a
Material Adverse Effect, and there has not occurred any event that with the
lapse of time or the giving of notice or both would constitute such a
default.
5.11 [Reserved].
5.12
Litigation.
Except
as disclosed in MAF Reports, there is no Action pending, or, to the Knowledge
of
MAF, threatened against or affecting MAF or any MAF Subsidiary which, if decided
adversely to MAF or an applicable MAF Subsidiary, would be reasonably expected
to
31
have
a
Material Adverse Effect, nor is there any Governmental Order, outstanding
against MAF or any MAF Subsidiary having, or which would, to the Knowledge
of
MAF, now or in the future have a Material Adverse Effect.
5.13 Compliance
with Laws and Orders.
(a) MAF
and
each MAF Subsidiary hold all licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and have complied in all respects with and are not in default
in any respect under any, applicable Law, and implementing rules, regulations
or
publicly-issued statements of policy of any Governmental Authority relating
to
MAF or a MAF Subsidiary, except where the failure to hold such license,
franchise, permit or authorization or such noncompliance or default is not
reasonably likely to have, either individually or in the aggregate, a Material
Adverse Effect.
(b) Except
as
disclosed in MAF Reports, the businesses of MAF and each MAF Subsidiary are
not
being conducted in violation of any applicable Law or Governmental Order
(including, without limitation, in the case of a MAF Subsidiary that is a
thrift, all applicable Laws pertaining to the conduct of the banking business
and the exercise of trust powers), except for violations which individually
or
in the aggregate do not have, and to the Knowledge of MAF, will not have,
individually or in the aggregate, a Material Adverse Effect. To the Knowledge
of
Seller, any MAF Subsidiary that is a bank or thrift is not in violation of
those
Laws applicable to depository institutions, and corresponding regulations and
publicly-issued
statements of policy of any Governmental Authority relating to CRA, privacy
Laws, the BSA or anti-money laundering statutes in a manner that would
materially delay the receipt of approvals of Governmental Authorities required
to consummate the transactions contemplated in this Agreement. Other than
regulatory examinations conducted in the ordinary course, no investigation
or
review by any Governmental Authority with respect to MAF or any MAF Subsidiary
is pending or, to the Knowledge of MAF, threatened, nor has any Governmental
Authority indicated an intention to conduct the same in each case other than
those the outcome of which will not have nor reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect.
(c) Except
as
is not reasonably likely to have, either individually or in the aggregate,
a
Material Adverse Effect, MAF and each MAF Subsidiary have properly administered
all accounts for which it acts as a fiduciary, including accounts for which
it
serves as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the governing
documents, applicable Law and common law. None of MAF, any MAF Subsidiary,
or
any director, officer or employee of MAF or of any MAF Subsidiary, has committed
any breach of trust or fiduciary duty with respect to any such fiduciary account
that is reasonably likely to have, either individually or in the aggregate,
a
Material Adverse Effect, and the accountings for each such fiduciary account
are
true and correct and accurately reflect the assets of such fiduciary account
except as would not be reasonably likely to have, either individually or in
the
aggregate, a Material Adverse Effect.
5.14 Agreements
with Regulators, Etc.
Neither
MAF nor any MAF Subsidiary is a party to any written agreement or memorandum
of
understanding with, or a party to any commitment letter with, board resolution
or similar undertaking to, or is a recipient of any
32
extraordinary
supervisory letter from, or is subject to any other Governmental Order by,
any
Governmental Authority, which (i) restricts materially the conduct of its
business, (ii) may materially delay the receipt of approvals of
Governmental Authorities required to consummate the transactions contemplated
in
this Agreement or (iii) in any manner relates to its capital adequacy, its
credit or reserve policies or its management, nor has MAF been advised by any
Governmental Authority that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter
or other Governmental Order. Neither MAF nor any MAF Subsidiary is required
by
Section 32 of the FDIA to give prior notice to a federal banking agency of
the
proposed addition of any individual to its Board of Directors or the employment
of an individual as a senior or executive officer. To the Knowledge of MAF,
there is no reason why the regulatory approvals referred to in
Section 5.6(c) above should not be obtained.
5.15 Financial
Advisors.
Except
for fees paid and payable to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
(“KBW”),
neither MAF nor any MAF Subsidiary has paid or will become obligated to pay
any
fee (including any break-up or termination fee) or commission to any broker,
finder, intermediary or any other Person in connection with, or as a result
of,
the transactions contemplated by this Agreement. Attached as Schedule 5.15
to the MAF Disclosure Letter is a true, accurate and complete copy of the
engagement letter between MAF and KBW for any fees paid and payable by MAF
to
KBW, in connection with, or as a result of, the transactions contemplated
by this Agreement. As of the date of this Agreement, MAF has received an opinion
of KBW, issued to the Board of Directors of MAF, to the effect that, as of
the
date of the opinion, the Merger Consideration is fair from a financial point
of
view to holders of MAF Common Stock.
5.16 MAF
Action.
The
Board of Directors of MAF (at a meeting duly called, constituted and held)
has
by the requisite vote of all directors present (a) determined that the
Merger is advisable and in the best interests of MAF and its stockholders,
(b) approved this Agreement and the transactions contemplated hereby,
including the Merger, and (c) has directed that the Merger be submitted for
consideration by the MAF’s stockholders at the MAF Meeting. The Board of
Directors of MAF has approved the transactions contemplated by this Agreement
and taken all steps necessary to exempt (i) the execution of this
Agreement, (ii) the Merger and (iii) the transactions contemplated
hereby, from any provision of the DGLC that purports to limit or restrict
business combinations or the ability to acquire shares or to vote shares and
any
other applicable business combination or anti-takeover provisions of MAF’s
certificate of incorporation and by-laws.
5.17 Vote
Required.
The
affirmative votes of a majority of the outstanding shares of MAF Common Stock
entitled to vote thereon are the only votes of the holders of any class or
series of MAF capital stock necessary to approve this Agreement and the
transactions contemplated by this Agreement.
5.18 Material
Interests of Certain Persons.
Except
as disclosed in the MAF Reports, no officer or director of MAF, or any Associate
of any such officer or director, has any material interest in any contract
or
property (real or personal), tangible or intangible, used in or pertaining
33
to
the
business of MAF or any MAF Subsidiary that is required to be disclosed under
the
requirements of the Exchange Act.
5.19 Environmental
Matters.
To the
Knowledge of MAF, (i) neither MAF nor any MAF Subsidiary is in material
violation of or has any material liability, absolute or contingent, in
connection with or under any Environmental Law, except any such violations
or
liabilities which would not reasonably be expected to have, individually or
in
the aggregate, a Material Adverse Effect; (ii) the condition of the Real
Estate, Loan Portfolio Properties, Trust Properties and Other Properties of
MAF
or any MAF Subsidiary does not constitute a violation of or has not resulted
in
any liability, absolute or contingent to MAF or any MAF Subsidiary, under any
Environmental Law, except any such violations or liabilities which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect; and (iii) there are no Actions pending or, to the Knowledge
of MAF, threatened relating to any Loan Portfolio Properties, Trust Properties
and Other Properties, including, without limitation, any notices, demand letters
or requests for information from any federal or state environmental agency
relating to any such liability under or violation of Environmental Law, which
would impose a material liability upon MAF or any MAF Subsidiary pursuant to
any
Environmental Law, except any such violations or liabilities which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. This Section 5.19 contains the sole and exclusive
representations and warranties of MAF related to Environmental Laws and
Hazardous Substances.
5.20 Labor
Matters.
(a) MAF or the MAF Subsidiaries are not engaged in, and have not engaged
in, any unfair labor practice; (b) there is no labor strike, dispute,
slowdown or stoppage actually pending, or to the Knowledge of MAF
threatened, against or directly affecting MAF or the MAF Subsidiaries;
(c) no union is currently certified, and there is no union representation
question and no union or other organizational activity that would be subject
to
the National Labor Relations Act (29 U.S.C. Section 151 et seq.) exists or
is threatened; (d) no grievance or arbitration proceeding arising out of or
under collective bargaining agreements is pending and no claims therefore exist
or, to the Knowledge of MAF, are threatened; (e) no collective bargaining
agreement exists which is binding on MAF and/or any MAF Subsidiary;
(f) neither MAF nor any MAF Subsidiary has experienced any material work
stoppage or other material labor difficulty; and (g) neither MAF nor
any MAF Subsidiary is delinquent in any material payments to any of its current
or former officers, directors, employees or agents for any wages, salaries,
commissions, bonuses, benefits or other compensation for any services performed
by them or amounts required to be reimbursed to them.
5.21 Minute
Books.
The
minute books of MAF and each MAF Subsidiary contain and will contain at Closing
with respect to meetings and actions occurring after the date hereof accurate
records of all material corporate actions of their respective stockholder(s)
and
Boards of Directors (including committees of the Board of Directors or
managers), and the signatures contained therein are true signatures of the
Persons whose signatures they represent.
5.22 Loans.
All of
the loans, leases, installment sales contracts and other credit transactions
on
the books of MAF and the MAF Subsidiaries are valid and properly documented
and
were made in the ordinary course of business, and the security therefor, if
any,
is valid and properly perfected, except where such failure is not reasonably
likely to have, either individually
34
or
in the
aggregate a Material Adverse Effect. Neither the terms of such loans, leases,
installment sales contracts and other credit transactions, nor any of the
documentation evidencing such transactions, nor the manner in which such loans,
leases, installment sales contracts and other credit transactions have been
administered and serviced, nor MAF’s procedures and practices of approving or
rejecting applications for such transactions, violates any Law applicable
thereto, including, without limitation, the Truth-In-Lending Act, as amended,
Regulations O and Z of the Federal Reserve Board, CRA, the Equal Credit
Opportunity Act, as amended, and state Laws relating to consumer protection,
installment sales and usury, except where such failure is not reasonably likely
to have, either individually or in the aggregate a Material Adverse
Effect.
5.23 Transactions.
Except
as disclosed in the MAF Reports, neither MAF, nor any MAF Subsidiary, has at
any
time in the last five (5) years, entered into any material contract, agreement
or other understanding involving the purchase or sale of any Affiliate, any
branch or a significant amount of its assets outside the ordinary course of
business and is not currently engaged in any discussions with any third party
regarding any such transaction. None of MAF or any MAF Subsidiary is by
contract, agreement (oral or written), or Governmental Order, subject to any
restrictions concerning (i) any of its businesses, (ii) businesses it
may engage in, (iii) the conduct of its business, (iv) customers it
may solicit or accept business from or (v) Persons it may solicit for
employment or hire.
5.24 State
Takeover Statutes.
MAF is
exempt from and the Merger shall not be subject to any state takeover
Law.
5.25 Real
Property.
(a) Section 5.25(a)
of the MAF Disclosure Letter identifies (i) each parcel of real property
and any improvements on a Leased Premises owned by MAF or a MAF Subsidiary
(each
an “Owned
Real Property”)
and
(ii) each real property premises leased by MAF or a MAF Subsidiary,
including any ground lease (each a “Leased
Premises”
and
together with Owned Real Properties, the “Real
Estate”),
and
lists the corresponding lease for each Leased Premises to which MAF or the
applicable MAF Subsidiary is a party (collectively, the “Lease
Agreements”).
(b) MAF
or
the MAF Subsidiary, as applicable, has good and marketable, indefeasible, fee
simple title to each Owned Real Property, free and clear of any and all
encumbrances other than Permitted Real Property Encumbrances. MAF and each
MAF
Subsidiary, if applicable, have valid leasehold interests in and are in
possession of the Leased Premises, and in each case, such leasehold interests
are free and clear of all Liens, other than Permitted Real Property
Encumbrances.
(c) To
the
Knowledge of MAF, the building, structures and improvements located on, fixtures
contained in, and appurtenances attached to, each Real Estate conform and are
in
compliance with all applicable Laws, including the Americans With Disabilities
Act. MAF has not received any notice from a lessor, any Governmental Authority
or any other Person requiring any work or repairs to Real Estate that the tenant
has not completed in compliance with such notice. To the Knowledge of MAF,
in
their present state of repair all structural and mechanical components of the
facilities serving the Real Estate (including the roof, all heating,
35
ventilation,
plumbing and electrical systems used in the operation thereof) are adequate
for
MAF’s or the applicable MAF Subsidiary’s purposes.
(d) Neither
MAF nor any MAF Subsidiary has entered into any sublease, license or assignment
of a Leased Premises and, other than MAF or an applicable MAF Subsidiary under
the applicable Lease Agreement, there are no Persons physically occupying any
portion of a Leased Premises.
(e) No
brokerage fees, commissions or any similar payments are owed or payable by
MAF
or any MAF Subsidiary to any third party in connection with the existence or
execution of a Lease Agreement, or in connection with any renewal, expansion
or
extension of any Lease Agreement.
(f) MAF
has
delivered or made available to National City a correct and complete copy of
each
Lease Agreement, together with all amendments and supplements thereto. Neither
MAF nor any MAF Subsidiary is in default under any Lease Agreement, which
default is reasonably likely to have, either individually or in the aggregate,
a
Material Adverse Effect, and there has not occurred any event that with the
lapse of time or the giving of notice or both would constitute such a
default.
5.26 Intellectual
Property.
(a) Section 5.26(a)
of the MAF Disclosure Letter sets forth a true and complete list of each item
of
(i) Intellectual Property owned by MAF or any MAF Subsidiary in its business
that is registered with, or subject to application for registration with, any
Governmental Authority or Internet domain name registrar, indicating for each
such item the owner, the registration or application number and the applicable
filing jurisdiction, and (ii) Intellectual Property for which MAF or any MAF
Subsidiary has a license to use that is otherwise material to the business
of
MAF or any MAF Subsidiary, except for licenses to “off-the-shelf” software that
is generally commercially available. To the Knowledge of MAF, all such
registrations with and applications to Governmental Authorities with respect
to
the Intellectual Property owned by MAF or any MAF Subsidiary are valid and
in
full force and effect. The Intellectual Property owned by MAF or any MAF
Subsidiary is owned free and clear of all Liens. The Intellectual Property
owned
or used by MAF or any MAF Subsidiary will not be limited or otherwise adversely
affected by virtue of the consummation of the transactions contemplated by
this
Agreement.
(b) None
of
the Intellectual Property owned or used by MAF or any MAF Subsidiary, to the
Knowledge of MAF, is subject to any outstanding Governmental Order or agreement
adversely affecting MAF’s or any MAF Subsidiary’s use thereof or rights thereto.
There is no Action pending, asserted or, to the Knowledge of MAF, threatened
against MAF or any MAF Subsidiary concerning the ownership, validity,
registerability, enforceability, infringement or use of, any Intellectual
Property or the licensed right to use any Intellectual Property owned or used
by
MAF or any MAF Subsidiary.
(c) To
the
Knowledge of MAF, none of the Intellectual Property owned or used by MAF or
any
MAF Subsidiary, nor the conduct of the businesses of MAF or any MAF
36
Subsidiary infringes
upon or misappropriates the rights of any third party, and neither MAF nor
any
MAF Subsidiary has received any claim, any cease and desist or equivalent letter
or any other written notice of any allegation that any of the Intellectual
Property owned or used by MAF or any MAF Subsidiary infringes upon,
misappropriates or otherwise violates the Intellectual Property of any third
party. Neither MAF nor any MAF Subsidiary has received any written opinions
of
counsel (outside or inside) relating to infringement, invalidity or
unenforceability of any Intellectual Property owned or used by MAF or any MAF
Subsidiary. To the Knowledge of MAF, no third party is infringing or
misappropriating any Intellectual Property right owned or used by MAF or any
MAF
Subsidiary.
(d) MAF
and
each MAF Subsidiary, as applicable, have taken commercially reasonable steps
to
protect and preserve the secrecy and confidentiality of the trade secrets and
source code included in the Intellectual Property listed in Section 5.26(a)
of the MAF Disclosure Letter.
5.27 Insurance.
MAF and
each MAF Subsidiary are insured with reputable insurers against such risks
and
in such amounts as its management reasonably has determined to be prudent in
accordance with industry practices. All of the insurance policies, binders,
or
bonds maintained by MAF or each MAF Subsidiary are in full force and effect
and
MAF and each MAF Subsidiary are not in material default thereunder.
5.28 Interest
Rate Risk Management Arrangements.
Neither
MAF nor any MAF Subsidiary is a party to any, nor is any property bound by,
any
interest rate swaps, caps, floors and option agreements used to manage interest
rate risk or other interest rate risk management arrangements.
5.29 ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act.
MAF is
in compliance with the provisions, including Section 404, of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and the certifications provided pursuant to
Sections 302 and 906 thereof were accurate as of the date such
certifications were made and such future certifications to be provided pursuant
to Sections 302 and 906 will be accurate as of the date such certifications
are
made.
5.30 Tax
Treatment.
As of
the date hereof, to the Knowledge of MAF, there is no reason why the Merger
will
fail to qualify as a reorganization under Section 368(a) of the
Code.
5.31 Notice
of Breach or Potential Breach.
MAF
shall promptly notify National City of any change, circumstance or event which
would cause any of the representations or warranties made by MAF pursuant to
this Agreement to be untrue as of the date hereof or at the Closing Date or
which prevents MAF from complying with any of its obligations hereunder. There
is no fact or development known to MAF which would have or would reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect
on
MAF’s or any MAF Subsidiary’s continuing business, which has not been set forth
in this Agreement or the MAF Disclosure Letter.
5.32 Disclosure.
No
representation or warranty by MAF in this Agreement after giving effect to
the
totality of the disclosures set forth in the MAF Disclosure Letter, contains
any
untrue statement of a material fact or omits to state a material fact required
to be stated
37
herein
or
therein or necessary to make any statement herein or therein not materially
misleading. Any claim by National City for a breach of representation, warranty,
covenant, agreement or obligation of MAF hereunder will not be affected by
any
investigation conducted by National City with respect to, or knowledge acquired
(or capable of being acquired), with respect to the accuracy or inaccuracy
of or
compliance with any such representation, warranty, covenant, agreement or
obligation.
VI.
COVENANTS
6.1 Acquisition
Proposals.
MAF and
each MAF Subsidiary shall not, directly or indirectly, and shall instruct and
otherwise use its best efforts to cause their respective officers, directors,
employees, agents or advisors or other representatives or consultants not to,
directly or indirectly, (i) other than purchases or sales of loans or
securities in the ordinary course of its business consistent with past practice,
solicit or initiate any proposals or offers from any Person relating to any
acquisition or purchase of all or a material amount of the assets of, or any
securities of MAF or any MAF Subsidiaries (including any tender offer or
exchange offer), or any proposal for merger, consolidation or business
combination recapitalization, liquidation, dissolution or similar transaction
involving MAF or a MAF Subsidiary (such transactions are referred to herein
as
“Acquisition
Transactions”)
or
(ii) except to the extent that the Board of Directors of MAF determines in
good faith, after consultation with outside legal counsel in the exercise
of its fiduciary duties in accordance with applicable Law, to participate in
any
discussions or negotiation regarding, or furnish to any other Person any
information with respect to, an Acquisition Transaction; provided, however,
that
nothing contained in this Section 6.1 shall restrict or prohibit any
disclosure by MAF that is required in any document to be filed with the SEC
after the date of this Agreement or any disclosure that, the Board of Directors
of MAF determines in good faith, after consultation with outside legal counsel,
is otherwise required under applicable Law. MAF will, and cause each MAF
Subsidiary to, immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. MAF will notify National City immediately
if any such inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with MAF or any MAF Subsidiary.
6.2 Interim
Operations of MAF.
During
the period from the date of this Agreement to the Effective Time, except as
specifically contemplated by this Agreement, as set forth in Section 6.2 of
the MAF Disclosure Letter or as otherwise approved expressly in writing by
National City, which such approval shall not be unreasonably
withheld:
(a) Conduct
of Business.
MAF
shall, and shall cause each MAF Subsidiary to, conduct their respective
businesses only in the ordinary course of business consistent with past
practice. MAF shall use reasonable efforts to preserve intact the business
organization of MAF and each MAF Subsidiary, to keep available the services
of
its and their present key officers and employees and to preserve the goodwill
of
those having business relationships with MAF or any MAF Subsidiary. Other than
in the ordinary course of business consistent with past practice, MAF shall
not
(i) incur any indebtedness for borrowed money (it being understood and
agreed that incurrence of indebtedness in the ordinary course of business shall
include, without limitation, the creation of deposit liabilities, purchases
of
federal funds, sales of certificates of
38
deposit,
entering into short term borrowings with the Federal Home Loan Bank and entering
into repurchase agreements), (ii) assume, guarantee, endorse or otherwise
as an accommodation become responsible for the obligations of any other Person,
or (iii) make any loan or advance. MAF shall not, and shall not permit any
of the MAF Subsidiaries to, adopt a plan of complete or partial liquidation
or
resolutions providing for or authorizing such a liquidation or dissolution,
restructuring, recapitalization or reorganization.
(b) Certificate
and By-Laws.
MAF
shall not and shall not permit any MAF Subsidiary to make any change or
amendment to their respective certificate of incorporation or
by-laws.
(c) Capital
Stock.
MAF
shall not, and shall not permit any MAF Subsidiary to, issue or sell any shares
of capital stock or any other securities of any of them (other than pursuant
to
any exercise of the MAF Options or vesting of the RSUs) or issue any securities
convertible into or exchangeable for, or options, warrants to purchase, scrip,
rights to subscribe for, calls or commitments of any character whatsoever
relating to, or enter into any contract, understanding or arrangement with
respect to the issuance of, any shares of capital stock or any other securities
of any of them or enter into any arrangement or contract with respect to the
purchase or voting of shares of their capital stock, or adjust, split, combine
or reclassify any of their
capital stock or other securities or make any other changes in their capital
structures. Neither MAF nor any MAF Subsidiary shall grant any additional stock
options. Neither MAF nor any MAF Subsidiary shall grant any awards under any
MAF
Employee Plan, including, without limitation, stock options, restricted stock,
stock units or stock.
(d) Dividends.
MAF
shall not, and shall not permit any MAF Subsidiary to, declare, set aside,
pay
or make any dividend or other distribution or payment (whether in cash, stock
or
property) with respect to, or purchase or redeem, any shares of the capital
stock of any of them other than (i) regular quarterly cash dividends in an
amount not to exceed $0.27 per share on MAF Common Stock, payable on or about
the regular historical payment dates, (ii) dividends paid by any
wholly-owned MAF Subsidiary to MAF or another wholly-owned MAF Subsidiary with
respect to its capital stock between the date hereof and the Effective Time
and,
with respect to MAF Bank, so long as any payment of such amounts by MAF Bank
do
not, after giving effect to any such payment, cause MAF Bank to not be
“well-capitalized”, as defined by the Federal Deposit Insurance Corporation,
(iii) regular quarterly cash distributions paid on the preferred stock of
MAF Capital Trust I and MAF Capital Trust II, and (iv) annual dividends
paid on common and preferred membership interests of MAF Realty, L.L.C. - IV.
Notwithstanding the foregoing, it is agreed by the Parties that they shall
cooperate to assure that, for any quarter, there shall not be a duplication
of
nor omission of the payment of dividends to stockholders of MAF. For purposes
of
the preceding sentence, the dividend for any quarter shall mean the dividend
for
which the record date occurs in such quarter.
(e) Employee
Plans, Compensation, Etc.
Except
as otherwise provided in this Agreement, MAF shall not, and shall not permit
any
MAF Subsidiary to, adopt or amend (except as required by Law (including as
required to maintain qualification under Section 401(a) of the Code or to
avoid noncompliance with Section 409A of the Code) or other contractual
obligations existing on the date hereof) any bonus, profit sharing,
compensation, severance, termination, stock option, pension, retirement,
deferred compensation, employment or other employee benefit
39
agreements,
trusts, plans, funds or other arrangements for the benefit or welfare of any
director, officer or employee, or (except for the bonus plans and the normal
merit increases in the ordinary course of business consistent with past practice
not to exceed the limits set forth in Section 6.5(g) of the MAF Disclosure
Letter) increase the compensation or fringe benefits of any director, officer
or
employee or pay any benefit not required by any existing plan, agreement or
arrangement (including, without limitation, the granting of stock options,
stock
appreciation rights or RSUs) or take any action or grant any benefit not
required under the terms of any existing agreements, trusts, plans, funds or
other such arrangements or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
(f) Certain
Policies.
MAF
shall modify and change its loan, litigation, real estate valuation, asset,
liquidity and investment portfolio policies and practices (including loan
classifications and level of reserves) as requested by National City in writing
immediately prior to the Closing Date so as to be consistent with those of
National City and U.S. GAAP; provided that MAF and its Subsidiaries shall not
be
required to take any such action that is not permitted under U.S. GAAP, the
Code, regulatory guidance, or applicable Law, whichever is applicable. MAF’s
representations, warranties or covenants contained in this Agreement shall
not
be deemed to be untrue or breached in any respect for any purpose as a
consequence of any such modifications
or changes, nor shall any change in the Merger Consideration be effected as
a
consequence of any such modifications or changes.
(g) Other
Operations.
During
the period from the date of this Agreement to the Effective Time, MAF shall
not
take any action that could (i) materially delay or adversely affect the
ability of National City to obtain any approvals of Governmental Authorities
required to permit consummation of the Merger or (ii) materially adversely
affect its ability to perform its obligations under this Agreement or to
consummate the transaction contemplated hereby.
(h) Delivery
of Monthly Financial Information.
MAF
shall promptly after the end of each month (and in no event later than
twenty-five (25) days after the end of each month) deliver to the officers
of
National City identified in Section 6.2(h) of the National City Disclosure
Letter copies of the unaudited consolidated balance sheets and statements of
income of MAF which have been provided to MAF’s Board of Directors, as of and
for such month then ended (the “Monthly
Financial Information”).
The
Monthly Financial Information shall be prepared consistent with past practice.
The Monthly Financial Information shall be accompanied by a certificate signed
by an authorized officer of MAF, as applicable, that states that (i) with
respect to Monthly Financial Information for the last month of a fiscal quarter,
the Monthly Financial Information complies with the representations and
warranties set forth in Section 5.7 with respect to the MAF Unaudited
Interim Financial Information, and (ii) with respect to Monthly Financial
Information for the first two months of a fiscal quarter, the Monthly
Information was prepared consistent with the standards set forth on
Schedule 6.2(h) of National City’s Disclosure Letter.
(i) Interest
Rate Risk Management Arrangements.
Other
than entering into mortgage instruments and other agreements with customers
and
other than in the ordinary course of business consistent with past practice
as
set forth in Section 5.28 of the MAF Disclosure Letter, neither MAF nor any
MAF Subsidiary will become a party to any, nor will any of their
40
property
become bound by, any interest rate swaps, caps, floors and option agreements
used to manage interest rate risk or other interest rate risk management
arrangements.
(j) Additional
Agreements.
Notwithstanding anything to the contrary in this Agreement, MAF and National
City shall take all actions necessary to enact the items set forth in
Section 6.2(j) of the National City Disclosure Letter.
6.3 Interim
Operations of National City.
During
the period from the date of this Agreement to the Effective Time, without the
prior written consent of MAF, National City shall not take any action that
would
(a) materially delay or adversely affect the ability of National City to
obtain any approvals of Governmental Authorities required to permit consummation
of the Merger or (b) materially adversely affect its ability to perform its
obligations under this Agreement or to consummate the transaction contemplated
hereby.
6.4 Control
of Other Party’s Business.
Nothing
contained in this Agreement shall give National City, directly or indirectly,
the right to control or direct the operations of MAF or shall give MAF, directly
or indirectly, the right to control or direct the operations of National City
prior to the Effective Time. Prior to the Effective Time, each of MAF and
National City shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its and its Subsidiaries’ respective
operations.
6.5 Employee
Matters.
(a) MAF
Employee Plans.
National City shall honor, maintain and perform on and after the Effective
Time,
without deduction, counterclaims, interruptions or deferment (other than
withholding under applicable Law and such deductions, counterclaims,
interruptions or deferments as may be permitted under the MAF Employee Plans),
all of MAF’s and MAF Subsidiaries’ vested obligations under MAF Employee Plans;
provided,
further,
that
this provision shall not be construed as precluding the merger of a MAF Employee
Plan into a National City Employee Plan or the termination of such MAF Employee
Plan; and provided,
further,
that
National City shall have the right to delay the payment, or limit the form
of
payment, of any amount under any MAF Employee Plan and the right to amend any
MAF Employee Plan to delay the payment, or limit the form of payment, of any
amount under any MAF Employee Plan to the extent National City, in good faith,
determines that such delay or limitation is necessary to avoid adverse tax
consequences under Section 409A of the Code and the regulations promulgated
thereunder, and National City shall not exercise any discretion or take any
action to cause any such adverse tax consequences.
(b) Employment
of Continuing Employees.
National City acknowledges that each individual who is an employee of MAF or
any
MAF Subsidiary immediately prior to the Effective Time (a “Continuing
Employee”)
shall
continue to be an employee of the SURVIVING CORPORATION or a MAF Subsidiary
after the Effective Time. After the conversion of the Continuing Employees
to
National City’s welfare plans as contemplated by Section 6.5(d) below, each
Continuing Employee, while employed by National City or a National City
Subsidiary, shall continue to receive base pay and the benefits under the
Eligible Plans that in the aggregate are no less favorable than the benefits
under the Eligible Plans enjoyed generally by National City employees working
in
similar business lines.
41
(c) [Reserved].
(d) Participation
in National City Employee Plans.
No
later than January 1 of the second year following the year of the Effective
Time, National City and the applicable National City Subsidiary shall cause
the
Continuing Employees, while employed by National City or the applicable National
City Subsidiary, to be eligible to participate in the plans listed in
Section 6.5(d) of the National City Disclosure Letter (the “Eligible
Plans”)
in
which similarly situated National City employees participate. In the event
that
applicable Law or the terms of National City Employee Plans do not permit
immediate eligibility for the Continuing Employees for any such National City
Employee Plans, then the Continuing Employees shall be eligible to participate
in such National City Employee Plans as of the earliest eligibility date.
National City or the applicable National City Subsidiary shall accomplish the
migration of the Continuing Employees to the Eligible Plans as set forth in
Section 6.5(d) of the MAF Disclosure Letter.
(e) Credit
for Service.
For
purposes of all Eligible Plans covering Continuing Employees or any of their
dependents or beneficiaries, National City shall credit or shall cause
the
Surviving Corporation to credit the Continuing Employees with all service with
MAF or any MAF Subsidiaries for purposes of eligibility and vesting (including
eligibility to receive matching contributions under National City’s 401(k) plan)
as if such service, and compensation, had been performed for National City,
but
not for purposes of eligibility, vesting or benefits under the National City
Non-Contributory Retirement Plan or eligibility for premium subsidies under
National City’s retiree welfare benefit plan. Notwithstanding anything herein to
the contrary, years of service with MAF or any MAF Subsidiary shall be counted
for benefit accrual purposes under National City’s vacation pay plan and any
severance plan of National City to which a Continuing Employee may become
subject.
(f) Severance
Upon Termination of Continuing Employee.
If a
Continuing Employee is terminated without cause at or after the Effective Time
by National City or any National City Subsidiary, such Continuing Employee
shall
be entitled to the severance benefits that would be paid from time to time
under
the severance benefit plan or program of MAF attached as Section 6.5(f) to
the MAF Disclosure Letter.
(g) Additional
Agreements.
Notwithstanding anything to the contrary in this Agreement, MAF and National
City shall take all actions necessary to enact the items set forth on
Section 6.5(g) of the MAF Disclosure Letter.
6.6 Access
and Information.
Upon
reasonable notice, National City and MAF shall, and shall cause its respective
Subsidiaries to, afford to the other party hereto and its representatives
(including, without limitation, directors, officers and employees of such
investigating party and its Affiliates, and counsel, accountants and other
professionals retained) such access during normal business hours throughout
the
period prior to the Effective Time to the books, records (including, without
limitation, Tax Returns and work papers of independent auditors, subject to
their consent), properties, personnel and to such other information (in whatever
form maintained, whether documentary, digital or otherwise) including, but
not
limited to, MAF’s general ledger and the consolidating balance sheets and income
statements of MAF Subsidiaries, as such investigating party may reasonably
request; provided,
however,
that a
Party shall not be required to provide access to any such information if the
providing of such access
42
(i) would
be reasonably likely, in the advice of counsel, to result in the loss or
impairment of any privilege generally recognized under Law with respect to
such
information or (ii) would be precluded by any Law or Governmental Order.
Any claim by a Party for a breach of representation, warranty, covenant,
agreement or obligation of such Party hereunder shall not be affected by
any
investigation conducted by such Party with respect to, or knowledge acquired
(or
capable of being acquired), with respect to the accuracy or inaccuracy of
or
compliance with any such representation, warranty, covenant, agreement or
obligation. All information contemplated hereby shall be subject to the terms
and conditions of the Confidentiality Agreements.
6.7 Certain
Filings, Consents and Arrangements.
National City and MAF shall (a) as soon as reasonably practicable, but in
no event later than forty-five (45) days from the date of this Agreement, make
any required filings and applications required to be filed with Governmental
Authorities between the date of this Agreement and the Effective Time,
(b) cooperate with one another (i) in promptly determining whether any
other filings are required to be made or consents, approvals, permits or
authorizations are required to be obtained under any
other
relevant Law and (ii) in promptly making any such filings (including giving
the other Party a reasonable opportunity to review and comment on the
non-confidential portion of any applications), furnishing information required
in connection therewith and seeking timely to obtain any such consents,
approvals, permits or authorizations and (c) deliver to the other Parties
copies of the publicly available portions of all such reports promptly after
they are filed. In addition, MAF shall obtain any other consents, terminations,
approvals, permits or authorizations as may be required from any third party
to
effect the Merger including, without limitation, the consents or terminations,
as indicated, to those agreements identified in Section 6.7 of the National
City Disclosure Letter.
6.8 State
Takeover Statutes.
MAF
shall take all necessary steps to (a) exempt MAF and the Merger from the
requirements of any state takeover Law by action of the Board of Directors
of
MAF or otherwise and (b) upon the request of National City, assist in any
challenge by National City to the applicability to the Merger of any state
takeover Law.
6.9 Indemnification.
(a) From
and
after the Effective Time, in the event of any threatened or actual Action,
whether civil, criminal or administrative, including, without limitation, any
such Action in which any Person who is now, or has been at any time prior to
the
date of this Agreement, or who becomes prior to the Effective Time, a director
or officer of MAF or any MAF Subsidiary (the “D&O
Indemnitees”)
is, or
is threatened to be, made a party based in whole or in part on, or arising
in
whole or in part out of, or pertaining to (i) the fact that he is or was a
director, officer or employee of MAF, any of the MAF Subsidiaries or any of
their respective predecessors; or (ii) this Agreement or any of the
transactions contemplated hereby, whether in any case asserted or arising before
or after the Effective Time, National City shall assume and honor any obligation
MAF had immediately prior to the Effective Time with respect to the
indemnification of each such D&O Indemnitee against any Indemnifiable Losses
to the fullest extent permitted by Law in connection with any such threatened
or
actual Action, and in the event of any such threatened or actual Action (whether
asserted or arising before or after the Effective Time). National City’s
obligations under this Section 6.9(a) shall continue in full force and
effect for a period of six (6) years from the Effective Time; provided,
however,
that
all rights to
43
indemnification
in respect of any Claim asserted or made within such period shall continue
until
the final disposition of such Claim.
(b) National
City agrees that all rights to indemnification and all limitations on liability
existing in favor of the directors, officers and employees of MAF and the MAF
Subsidiaries, and their respective heirs and assigns (the “Covered
Parties”)
as
provided in their respective articles or certificates of incorporation or code
of regulations or by-laws as in effect as of the date hereof with respect to
matters occurring prior to the Effective Time shall survive the Merger and
shall
continue in full force and effect, without any amendment thereto.
(c) National
City, from and after the Effective Time, shall cause the Persons who served
as
directors or officers of MAF and the MAF Subsidiaries on or before the Effective
Time to be covered by MAF’s existing directors’ and officers’ liability
insurance policy or an equivalent “tail” directors and officers liability
insurance policy for a period of not less than six (6)
years
from the Effective Time (provided, that National City may substitute therefore
policies providing or maintain policies that provide substantially similar
coverage and amounts containing terms and conditions which are not materially
less favorable than such policy) (the “Insurance
Policies”);
provided,
however,
that
after the first year of coverage under the Insurance Policies, National City
shall not be obligated to make annual premium payments (or the annualized
equivalent in premium payments for whatever period may be covered) pursuant
to
this Section 6.9(c) for the Insurance Policies to the extent such premiums
exceed 150% of the annual premiums paid as of the date hereof by MAF for its
current premiums for such insurance (the “Insurance
Expense Cap”),
and
National City shall use its reasonable best efforts to obtain the Insurance
Policies commencing on the Effective Time and, within the Insurance Expense
Cap,
keep such Insurance Policies in effect until the sixth anniversary of the
Effective Time. If National City is unable to obtain such Insurance Policy
with
the coverage required hereby within the Insurance Expense Cap, then National
City shall use the full amount of the Insurance Expense Cap to obtain one or
more alternate insurance policies with as much coverage as is commercially
obtainable.
(d) If
National City or any of its successors or assigns (i) consolidates with or
merges into any other Person and shall not be the continuing or surviving
corporation of such consolidation or merger, or (ii) transfers or conveys
all or substantially all of its properties and assets to any Person, then,
and
in each such case, to the extent necessary, proper provision shall be made
so
that the successors and assigns of National City assume the obligations set
forth in this Section 6.9.
(e) The
provisions of this Section 6.9 are intended to be for the benefit of, and
shall be enforceable by, as the case may be, each D&O Indemnitee of MAF and
each MAF Subsidiary and their respective heirs, representatives and assigns.
National City agrees to pay all reasonable costs and expenses (including fees
and expenses of counsel) that may be incurred by any such Person or his or
her
personal representatives in successfully enforcing the obligations of National
City under this Section 6.9. The provisions of this Section 6.9 shall
survive the Closing for an indefinite period of time and are in addition to
any
other rights to which a D&O Indemnitee may be entitled.
44
6.10 Additional
Agreements.
(a) Subject
to the terms and conditions herein provided, each Party agrees to use its
reasonable best efforts to take promptly, or cause to be taken promptly, all
actions and to do promptly, or cause to be done promptly, all things necessary,
proper or advisable under applicable Laws to consummate and make effective
as
promptly as practicable the transactions contemplated by this Agreement,
including using its reasonable best efforts to obtain all necessary actions
or
non-actions, extensions, waivers, consents and approvals from all applicable
Governmental Authorities or Persons, effecting all necessary registrations,
applications and filings and obtaining any required contractual consents and
regulatory approvals,
except
MAF shall use its reasonable best efforts to take or obtain all necessary
actions or non-actions, extensions, waivers, consents and approvals from all
applicable Governmental Authorities or Persons for the contracts identified
on
Section 6.10(a) of the National City Disclosure Letter, and National
City shall cooperate in good faith to assist MAF in obtaining all such actions
or non-actions, extensions, waivers, consents and approvals.
(b) Subject
to Section 6.17 below, each Party covenants, for itself and its Affiliates,
not
to take intentionally any action that would, or reasonably might be expected
to,
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue, subject to such exceptions as do not have, and would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on National City or MAF, or on the Surviving Corporation
following the Effective Time, or in any of the conditions to the Merger not
being satisfied or in a violation of any provision of this Agreement, or (unless
such action is required by applicable Law) which would adversely affect the
ability of the Parties to obtain any approval required for the consummation
of
the Merger without imposition of conditions or restrictions.
6.11 Publicity.
The
initial press release announcing this Agreement shall be a joint press release
and thereafter MAF and National City shall consult with each other in issuing
any press releases or otherwise making public statements with respect to the
transactions contemplated hereby and in making any filings with any Governmental
Authority or with any national securities exchange with respect
thereto.
6.12 Registration
Statement.
National City agrees to promptly prepare and file the Registration Statement
with the SEC (including the Proxy Statement constituting a part thereof). MAF
agrees to cooperate with National City in the preparation of the Registration
Statement and Proxy Statement; and provided that MAF has so cooperated National
City agrees to file the Registration Statement in preliminary form with the
SEC
as promptly as reasonably practicable and shall use reasonable best efforts
to
cause such filing to occur within thirty (30) days after execution of this
Agreement. Each Party agrees to use reasonable best efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as reasonably practicable after filing thereof and to maintain the
effectiveness of such Registration Statement. National City shall also take
any
action required to be taken under state blue sky or securities Laws in
connection with the issuance of the National City Common Stock pursuant to
the
Merger, and MAF shall promptly furnish National City all information concerning
MAF and the holders of its capital stock and shall take any action as National
City may reasonably request in connection with any such action.
45
6.13 Proxy
Statement. As soon as practicable after the date hereof, MAF shall prepare
and provide to National City the Proxy Statement for inclusion with the
Registration Statement and otherwise cooperate with National City in the
preparation of the Proxy Statement and Registration Statement, use its
reasonable best efforts to assist National City to cause the Registration
Statement to be declared effective, and promptly thereafter mail the Proxy
Statement to all holders of shares of MAF Common Stock entitled to vote at
the
MAF Meeting.
6.14 Stockholders’
Meeting.
MAF
shall take all action necessary, in accordance with applicable Law and its
certificate of incorporation and by-laws, to convene a special meeting of the
holders of MAF Common Stock (such meeting and any adjournments thereof, the
“MAF
Meeting”)
as
promptly as practicable for the purpose of considering and taking action upon
this Agreement.
Unless the Board of Directors of MAF shall have determined in good faith, after
consultation with counsel, that making such a recommendation would cause the
Board of Directors of MAF to violate its fiduciary duty under applicable Law,
the Board of Directors of MAF shall recommend that the holders of MAF Common
Stock vote in favor of and approve the Merger and adopt this Agreement at the
MAF Meeting.
6.15 Stock
Exchange Listings.
National City shall assure that the National City Common Stock to be issued
pursuant to the Merger is properly listed on the New York Stock
Exchange.
6.16 Tax
Returns.
MAF
shall promptly make available to National City, upon request by National City,
true and correct copies of the federal, state and local income Tax Returns
filed
by MAF and any of MAF Subsidiaries for each of the fiscal years that remains
open, as of the date hereof, for examination or assessment of Tax.
6.17 Adverse
Action.
From
the date hereof until the Effective Time, except as expressly contemplated
by
this Agreement, neither Party shall, without the written consent of the other
Party (which consent will not be unreasonably withheld, conditioned or delayed)
knowingly take any action that would, or would be reasonably likely to result
in
(a) any of its representations and warranties set forth in this Agreement
being or becoming untrue, (b) any of the conditions to the Merger set forth
in Article VIII below not being satisfied or (c) a material violation
of any provision of this Agreement except, in each case, as may be required
by
applicable Law.
6.18 Notice
of Breach or Potential Breach.
(a) MAF
or
National City, as the case may be, shall promptly notify in writing the other
Party of any change, circumstance or event which would cause any of the
representations or warranties made by such notifying Party pursuant to this
Agreement to not be true and correct in all material respects as of the date
hereof or at the Closing Date, or any of its obligations set forth in this
Agreement required to be performed at or prior to the Closing Date not to be
performed in all material respects at or prior to the Closing Date, including
without limitation, any event, condition, change or occurrence which
individually, or in the aggregate with any other events, conditions or changes
that have occurred after the date hereof, so far as reasonably can be foreseen
at the time of the occurrence, or thereafter, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on National City
or
MAF, as
46
the
case
may be. Such written notification shall contain an accurate and reasonably
detailed description of (i) the material breach, include supporting
documentation regarding the facts and circumstances surrounding such material
breach and describe the impact (or expected impact) of such breach on the
disclosing Party and its business operations and (ii) procedures and
timeline to cure such breach (a “Material Breach Notice”). After receipt
of any Material Breach Notice, the receiving Party may, within five (5)
Business Days thereof, reasonably request the notifying Party to furnish
additional information surrounding the description of the material breach,
the
impact (or the expected impact) of such breach, or the cure procedures and
timeline raised in the Material Breach Notice (an “Information Request”).
After receipt of an Information Request, the disclosing Party shall use its
reasonable best efforts to promptly deliver such additional information to
the
receiving Party.
(b) After
receipt of any Material Breach Notice, the receiving Party may, within
ten (10) Business Days thereof (the “Notification
Period”),
(i) notify the disclosing Party of its intent to waive such material
breach, (ii) request that the disclosing Party seek to cure such material
breach as set forth in the Material Breach Notice, or (iii) terminate this
Agreement pursuant to Sections 9.1(e) or (f) below as appropriate, if the
receiving Party reasonably determines that the material breach cannot be cured
within the time frames specified in the Material Breach Notice or as
contemplated by Section 6.18(c) below; provided,
however,
if the
receiving Party makes an Information Request, the Notification Period shall
be
extended to the tenth Business Day following the day the receiving Party
receives the last of the information requested in the Information
Request.
(c) If
the
receiving Party requests that the disclosing Party seek to cure the material
breach described in the Material Breach Notice, the disclosing Party shall
then
use its reasonable best efforts to cure such breach as set forth in the Material
Breach Notice within thirty (30) days from the date of the receiving
Party’s request. If at the end of such thirty (30)-day cure period the
material breach has not been cured as set forth in the Material Breach Notice,
but the disclosing Party is engaged in an ongoing and meaningful efforts to
cure
such breach as contemplated by the Material Breach Notice, the cure period
shall
extend for an additional thirty (30)-day period, unless the receiving Party
reasonably determines that the material breach cannot be cured during such
extended period as set forth in the Material Breach Notice, in which case,
the
receiving Party may terminate this Agreement pursuant to Sections 9.1(e) or
(f) below as appropriate. The notifying Party shall notify the receiving Party
when the material breach described in the Material Breach Notice is
cured.
(d) In
the
event the receiving Party fails to respond to the disclosing Party’s Material
Breach Notice within the Notification Period, the receiving Party shall be
deemed to have waived its right of termination described in the Material Breach
Notice; provided,
however,
that
any particular breach that is deemed to have been waived by the receiving Party
may thereafter be considered by the receiving Party in determining the aggregate
contribution of all events, conditions, changes and occurrences described by
the
disclosing Party pursuant to this Section 6.18 toward the occurrence of a
material breach by the disclosing Party.
6.19 Section 16.
National City and MAF agree that, in order to most effectively compensate and
retain MAF Insiders in connection with the Merger, both prior to and after
the
Effective Time, it is desirable that MAF Insiders not be subject to a risk
of
liability under
47
Section 16(b)
of the Exchange Act to the fullest extent permitted by applicable Law in
connection with the conversion of shares of MAF Common Stock and MAF Options
to
acquire shares of MAF Common Stock into shares of National City Common Stock
and
options to acquire shares of National City Common Stock in the Merger, and
for
that compensatory and retentive purpose agree to the provisions of this
Section 6.19. “MAF Insiders” shall mean those officers and directors
of MAF who are subject to the reporting requirements of Section 16(a) of
the Exchange Act. MAF shall, reasonably promptly following the date hereof,
provide to National City a list of (a) the MAF Insiders, (b) the
number of shares of National City Common Stock expected to be received pursuant
to the Merger, as appropriate, by each MAF Insider at the Effective Time on
account of shares of MAF Common Stock, MAF Options, RSUs or DSUs thereon,
reasonably expected to be held by such MAF Insider immediately prior to the
Effective Time and (c) a description of the material terms of such
unexercised options and such RSUs and DSUs. Prior to the Effective Time,
(x) the Board of Directors of MAF shall take such actions consistent with
the SEC’s interpretive guidance to approve the disposition of shares of MAF
Common Stock and MAF Options, RSUs and DSUs, by each MAF Insider for purposes
of
Rule 16b-3(e) such that the deemed “sale” of such shares of MAF Common Stock and
MAF Options, RSUs and DSUs, by such Persons pursuant to the Merger shall be
exempt from liability pursuant to Section 16(b) of the Exchange Act, and
(y) the Board of Directors of National City shall take such action
consistent with the SEC’s interpretive guidance to approve the acquisition of
shares of National City Common Stock by each director and officer of National
City for purposes of Rule 16b-3(d) under the Exchange Act such that the deemed
“purchase” of such shares of National City Common Stock, by such Persons
pursuant to the Merger shall be exempt from liability pursuant to
Section 16(b) of the Exchange Act.
6.20 Tax-Free
Reorganization Treatment.
Neither
National City nor MAF shall intentionally take or cause to be taken any action,
whether before or after the Effective Time, which would disqualify the Merger
as
a “reorganization” within the meaning of Section 368(a) of the
Code.
6.21 Title
Examination.
MAF
shall use its reasonable best efforts to cause, at its sole cost and expense,
a
title company, mutually acceptable to National City and MAF, to deliver title
examinations for each Owned Real Property, as soon as practicable, but in no
event later than July 31, 2007.
VII.
CLOSING MATTERS
7.1 The
Closing.
Subject
to satisfaction or waiver of all conditions precedent set forth in
Article VIII below, the closing (the “Closing”)
shall
occur at such location mutually agreeable to the Parties and on a date (the
“Closing
Date”)
which
is within seven (7) Business Days after the later of:
(a) the
first
date on which the Merger may be consummated in accordance with the approvals
of
any Governmental Authorities; and
(b) the
date
the Merger shall have been approved and adopted by the requisite vote of the
holders of shares of MAF Common Stock;
48
or
such
other date to which the Parties agree in writing. If all conditions are
determined to be satisfied in all material respects (or are duly waived) at
the
Closing, the Closing shall be consummated by the making of all necessary filings
required by all Governmental Authorities.
7.2 Documents
and Certificates.
National City and MAF shall use their respective reasonable best efforts, on
or
prior to the Closing, to execute and deliver all such instruments, documents
or
certificates as may be necessary or advisable, on the advice of counsel, for
the
consummation
at the Closing of the transactions contemplated by this Agreement to occur
as
soon as practicable.
VIII.
CONDITIONS
8.1 Conditions
to Each Party’s Obligations to Effect the Merger.
The
respective obligations of each Party to effect the Merger shall be subject
to
the fulfillment at or prior to the Closing Date of the following
conditions:
(a) The
Merger shall have been approved and adopted by the requisite vote of the holders
of shares of MAF Common Stock.
(b) The
shares of National City Common Stock issuable in the Merger shall have been
authorized for listing on the New York Stock Exchange.
(c) All
authorizations, consents, orders or approvals of, and all expirations of waiting
periods imposed by, any Governmental Authority which are necessary for the
consummation of the Merger (other than immaterial consents, the failure to
obtain of which would not have or reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect to, National City and National
City Subsidiaries taken as a whole or MAF and MAF Subsidiaries taken as a whole)
(collectively, “Consents”),
shall
have been obtained or shall have occurred and shall be in full force and effect
at the Effective Time; provided,
however,
that no
Consent shall be deemed to have been received if it shall include any conditions
or requirements which would so materially or adversely impact the economic
or
business benefits of the transactions contemplated by this Agreement so as
to
render inadvisable in the reasonable opinion of National City the consummation
of the Merger.
(d) The
Registration Statement shall have become effective in accordance with the
provisions of the Securities Act. No stop order suspending the effectiveness
of
the Registration Statement shall have been issued by the SEC and remain in
effect and no proceedings for such purpose shall be pending or threatened by
the
SEC; provided,
however,
that
prior to April 30, 2008, the fact that a stop order has been issued and
remains in effect shall not be the sole basis for termination of this Agreement
by a Party pursuant to Sections 8.1(d) or 8.1(e) of this Agreement so long
as the other Party is taking, or cooperating in taking, all commercially
reasonable actions to obtain the lifting of such stop order.
(e) No
temporary restraining order, preliminary or permanent injunction or other
Governmental Order by any Governmental Authority that prevents the consummation
of the Merger shall have been issued and remain in effect; provided,
however,
that
prior to the earlier of (i) April 30, 2008, or (ii) the time at
which such injunction or Governmental Order becomes final and non-appealable,
the entry of any such injunction or Governmental Order shall
49
not
be
the sole basis for termination of this Agreement by a Party pursuant to
Sections 8.1(d) or 8.1(e) of this Agreement so long as the other Party is
taking, or cooperating in taking, all commercially reasonable actions to cause
such injunction or Governmental Order to be appealed, vacated, lifted or
otherwise modified to permit the Merger to become effective.
(f) Vedder,
Price, ▇▇▇▇▇▇▇ & Kammholz, P.C., counsel to MAF shall have delivered to
MAF and National City its opinion, dated the day of the Effective Time,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth or referenced in such opinion that are consistent with
the
state of facts existing at the Effective Time, the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code and that, accordingly: (A) no gain or loss
will be recognized by National City or MAF as a result of the Merger (except
for
amounts resulting from any required change in accounting methods, any income
and
deferred gain recognized pursuant to U.S. Treasury Regulations issued under
Section 1502 of the Code, or other exceptions as set forth in such
opinion), (B) no gain or loss will be recognized by the stockholders of MAF
who exchange their shares of MAF Common Stock solely for shares of National
City
Common Stock pursuant to the Merger (except with respect to cash received in
lieu of a fractional share interest in National City Common Stock), (C) the
aggregate tax basis of the shares of National City Common Stock received by
a
MAF stockholder in the Merger (including any fractional shares of National
City
Common Stock deemed received and redeemed) will be the same as the aggregate
tax
basis of the shares of MAF Common Stock surrendered by such MAF stockholder
in
exchange therefor, and (D) the holding period of the shares of National
City Common Stock received in the Merger will include the period during which
the shares of MAF Common Stock surrendered in exchange therefore were held,
provided such shares of MAF Common Stock were held as capital assets at the
Effective Time. In rendering such opinion, counsel may require and rely upon
such representations as it deems appropriate and which shall be contained in
certificates of officers of MAF, National City and others.
8.2 Conditions
to Obligation of MAF to Effect the Merger.
The
obligation of MAF to effect the Merger shall be subject to the fulfillment
or
waiver at or prior to the Closing Date of the additional following
conditions:
(a) National
City shall have performed in all material respects its covenants contained
in
this Agreement required to be performed at or prior to the Closing
Date.
(b) The
representations and warranties of National City contained in this Agreement
shall be true and correct in all material respects when made and the
representations and warranties set forth in Article IV above shall be true
and correct in all material respects as of the Closing Date as if made at and
as
of such time, in each case except as otherwise expressly contemplated or
permitted by this Agreement and except for representations and warranties
relating to a time or times other than the Closing Date which were or will
be
true and correct at such time or times.
(c) National
City shall have furnished MAF a certificate dated the Closing Date, signed
by
the Chief Executive Officer and Chief Financial Officer of National City that,
to the Knowledge of National City, the conditions set forth in
Sections 8.2(a) and 8.2(b) above have been satisfied.
50
8.3 Conditions
to
Obligation of National City to Effect the Merger. The obligation of National
City to effect the Merger shall be subject to the fulfillment or waiver at
or
prior to the Closing Date of the additional following conditions:
(a) MAF
shall
have performed in all material respects its covenants contained in this
Agreement required to be performed at or prior to the Closing Date.
(b) The
representations and warranties of MAF contained in this Agreement shall be
true
and correct in all material respects when made and the representations and
warranties set forth in Article V above shall be true and correct in all
material respects as of the Closing Date as if made at and as of such time,
in
each case except as otherwise expressly contemplated or permitted by this
Agreement and except for representations and warranties relating to a time
or
times other than the Closing Date which were or will be true and correct at
such
time or times.
(c) MAF
shall
have furnished National City a certificate dated the Closing Date signed by
the
Chief Executive Officer and Chief Financial Officer of MAF that, to the
Knowledge of MAF, the conditions set forth in Sections 8.3(a) and 8.3(b)
above have been satisfied.
IX.
TERMINATION
9.1 Termination.
This
Agreement may be terminated at any time prior to the Effective Time by a Party
or the Parties upon written notice, notwithstanding any approval or adoption
of
this Agreement by the stockholders of MAF, as follows:
(a) by
mutual
written consent of the Board of Directors of National City and the Board of
Directors of MAF;
(b) by
National City or MAF, if the Merger shall not have been consummated on or before
April 30, 2008 (the “Outside
Termination Date”),
and
such terminating Party is neither (i) in material breach hereof nor (ii) the
notifying Party of a material breach pursuant to the procedures set forth in
Section 6.18, unless the termination is more than ten (10) Business Days after
the receiving Party has received the notifying Party’s notice of having cured
the material breach that was described in the Material Breach Notice pursuant
to
Section 6.18(c); provided,
however,
the
Outside Termination Date shall be extended as necessary to permit the Parties
to
exercise their respective rights and perform their respective obligations within
the time periods set forth in Section 6.18 above;
(c) by
National City or MAF, if the holders of MAF Common Stock do not adopt this
Agreement at the MAF Meeting by the requisite vote;
(d) by
National City or MAF, if any of the conditions specified in
Sections 8.1(b), (c), (d), (e) or (f) have not been met or waived by MAF
and National City at such time as such condition can no longer be satisfied;
(e) by
MAF,
provided MAF is not then in material breach of this Agreement, (i) if any
condition specified in Sections 8.2(b) or (c) above has not been met or
waived by MAF
51
at
such
time as such condition is no longer capable of being satisfied or (ii) if
the condition specified in Section 8.2(a) has not been met or waived by
MAF, except in each case, for any such breach which has been disclosed pursuant
to Section 6.18 and waived by the non-disclosing Party pursuant to Section
6.18
or cured by the disclosing Party within the time frame specified in Section
6.18;
(f) by
National City, provided National City is not then in material breach of this
Agreement, (i) if any condition specified in Sections 8.3(b) or (c)
above has not been met or waived by National City at such time as such condition
is no longer capable of being satisfied or (ii) if the condition specified
in Section 8.3(a) has not been met or waived by National City, except in
each case, for any such breach which has been disclosed pursuant to Section
6.18
and waived by the non-disclosing Party pursuant to Section 6.18 or cured by
the
disclosing Party within the time frame specified in Section 6.18;
(g) by
National City,
provided
National City is not then in material breach of this Agreement,
if the
MAF Meeting shall not have been called prior to September 30, 2007;
provided,
however,
the
period shall be extended to December 31, 2007 in the event the SEC does not
clear the Proxy Statement and so long as MAF is taking, or cooperating in
taking, all commercially reasonable actions to obtain clearance;
(h) by
National City or MAF, if any Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any final and non-appealable injunction,
Governmental Order or ruling that has the effect of making consummation of
the
Merger illegal or otherwise preventing or prohibiting consummation of the
Merger;
(i) by
National City, if the Board of Directors of MAF does not publicly recommend
in
the Proxy Statement that MAF’s stockholders approve and adopt this Agreement;
(j) by
National City, if after recommending that the stockholders of MAF approve and
adopt this Agreement, the Board of Directors of MAF shall have withdrawn,
modified or amended such recommendation in any manner adverse to National City;
(k) by
National City or MAF, if the Board of Directors of MAF shall have recommended
to
the stockholders of MAF an Acquisition Transaction with a third party or shall
have resolved to do so or shall have entered into any agreement for the
consummation of an Acquisition Transaction with a third party pursuant to the
terms of Section 6.1 (it being understood that MAF may terminate this Agreement
in order to concurrently enter into such agreement with a third party);
(l) by
National City, if a tender offer or exchange offer that if consummated would
result in any Person beneficially owning 25% or more of any class of equity
securities of MAF is commenced, and the Board of Directors of MAF fails to
recommend against acceptance of such tender offer or exchange offer by its
stockholders (including by taking no position with respect to the acceptance
of
such tender offer or exchange offer by its stockholders); it
being
understood that the fact that MAF or any of the other Persons described in
Section 6.1 has taken any of the actions set forth in Section 6.1 in
compliance with the terms of Section 6.1, together with a statement that
the Board of Directors of MAF continues to recommend the Merger and
52
this
Agreement, shall not be considered to be a withdrawal, adverse modification
or
adverse amendment in any material respect of such approval or recommendation
of
this Agreement;
(m) by
National City, if MAF shall have suffered a Material Adverse Effect, or events
or circumstances have occurred which could reasonably be expected to have,
a
Material Adverse Effect on MAF, and National City is not the cause of the
Material Adverse Effect; provided,
however,
MAF
shall have the right to cure such breach within thirty (30) days from the
date of the Material Adverse Effect, and provided,
further,
if at
the end of such thirty (30)-day period the material breach has not been
cured, but MAF is engaged in ongoing and meaningful efforts to cure such breach,
the cure period shall be extended for an additional thirty (30)-day period,
unless National City reasonably determines that the Material Adverse Effect
cannot be cured during such extended period, in which case, National City may
terminate this Agreement;
(n) by
MAF,
if National City shall have suffered a Material Adverse Effect, or events or
circumstances have occurred which could reasonably be expected to have, a
Material Adverse Effect on National City, and MAF is not the cause of the
Material Adverse Effect; provided,
however,
National City shall have the right to cure such breach within thirty (30)
days from the date of the Material Adverse Effect, and provided, further, if
at
the end of such thirty (30)-day period the material breach has not been
cured, but National City is engaged in ongoing and meaningful efforts to cure
such breach, the cure period shall be extended for an additional
thirty (30)-day period, unless MAF reasonably determines that the Material
Adverse Effect cannot be cured during such extended period, in which case,
MAF
may terminate this Agreement; or
(o) by
National City in the event that the conditions triggering the Fill-Up Provision
occur; provided that if National City elects to exercise its termination right
under this Section 9.1(o), it shall give notice to MAF within two (2) Business
Days after the expiration of the Twenty Day Period and MAF shall, for a period
of three (3) Business Days after its receipt of such notice, have the option
to
elect to have the Exchange Ratio calculated in accordance with the Fixed Ratio
Provision. If within such three (3) Business Day period, MAF delivers written
notice to National City that it intends to adjust the Exchange Ratio, as
contemplated by the preceding sentence, then no termination shall occur pursuant
to this Section 9.1(o) and this Agreement shall remain in full force and effect
in accordance with its terms (except that the Merger Consideration shall have
been so modified).
9.2 Effect
of Termination.
(a) In
the
event of termination of this Agreement by any Party as provided in
Section 9.1 above, this Agreement shall forthwith become void and there
shall be no liability on the part of either Party, except (i) as set forth
in this Section 9.2, Section 9.3, Section 10.3, and the last sentence
of Section 6.6, which shall survive any termination of this Agreement, and
(ii) notwithstanding anything to the contrary contained in this Agreement,
neither Party shall be relieved or released from any liabilities or damages
arising out of its willful or intentional breach of any provision of this
Agreement.
(b) In
recognition of the efforts, expenses and other opportunities foregone by
National City while structuring and pursuing the Merger, the Parties hereto
agree that MAF shall
53
(i) pay
to National City a termination fee of $57.6 million in the manner set forth
below, if this Agreement is terminated:
(A) (1) pursuant
to Sections 9.1(f) or (g) above and National City is not in material breach
of this Agreement and if within eighteen (18) months following the
effective date of termination, MAF or any MAF Subsidiary enters into any
agreement, contract, letter of intent or understanding with a third Person
relating to any direct or indirect acquisition or purchase by such Person of
MAF, any MAF Subsidiary or any business line of MAF or any equity securities
of
MAF or of any MAF Subsidiary, any tender offer or exchange offer that if
consummated would result in any Person beneficially owning 15% or more of any
class of equity securities of MAF or any MAF Subsidiary, any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving MAF or any MAF Subsidiary, or (2) pursuant
to Sections 9.1(d) (solely with respect to Section 8.1 (e)) or
(h) as a result of any third Person or its Affiliate having initiated or
instigated any such proceedings and if such third Person announces its intent
to
engage in a bona fide Acquisition Transaction as determined by the Board of
Directors of MAF in good faith, after consultation with outside legal counsel
and financial consultants, and if within eighteen (18) months following the
effective date of termination, MAF or any MAF Subsidiary enters into any
agreement, contract, letter of intent or understanding with such third Person
relating to any direct or indirect acquisition or purchase by such Person of
MAF, any MAF Subsidiary or any business line of MAF or any equity securities
of
MAF or of any MAF Subsidiary, any tender offer or exchange offer that if
consummated would result in such Person beneficially owning 15% or more of
any
class of equity securities of MAF or any MAF Subsidiary, any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving MAF or any MAF Subsidiary; or
(B) pursuant
to Section 9.1(i), (j), (k), or (l).
Any
amount that becomes payable pursuant to this Section 9.2(b) shall be
promptly paid by wire transfer of immediately available funds to an account
designated by National City within two (2) Business Days after such amount
is
owed to National City hereunder.
9.3 Relief
for Willful Breach; Specific Performance.
(a) Notwithstanding
anything to the contrary herein, in the event of a willful material breach
hereof by a Party, then the non-breaching Party shall be entitled to such
additional remedies and relief against the breaching Party as are available
at
law or in equity (with all remedies hereunder and thereunder being
cumulative).
(b) The
Parties agree that, in the event of any breach or threatened breach (whether
or
not willful or material) by a Party of any covenant, obligation or other term
or
provision set forth in this Agreement for the benefit of any other Party, such
other Party shall be entitled to (i) a decree or order of specific
performance or mandamus to enforce the observance and performance of such
covenant, obligation or other term or provision and (ii) an injunction
restraining such breach or threatened breach.
54
X.
MISCELLANEOUS
10.1 Waiver
and Amendment.
Subject
to applicable provisions of the DGCL, any provision of this Agreement may be
waived at any time by the Party which is, or whose stockholders are, entitled
to
the benefits thereof, and this Agreement may be amended or supplemented at
any
time, provided that no amendment will be made after any stockholder approval
of
the Merger which reduces or changes the form of the Merger Consideration without
further stockholder approval. No such waiver, amendment or supplement will
be
effective unless in a writing that makes express reference to this
Section 10.1 and is signed by the Party or Parties sought to be bound
thereby.
10.2 Entire
Agreement.
Other
than the agreements, contracts and any other understandings specifically
referred to herein, this Agreement contains the entire agreement among National
City and MAF with respect to the Merger and the other transactions contemplated
hereby, and supersedes all prior agreements among the Parties with respect
to
such matters.
10.3 Applicable
Law; Consent to Jurisdiction.
This
Agreement will be governed by and construed in accordance with the substantive
Laws of the State of Delaware. Each Party consents to personal jurisdiction
in
any Action brought in any federal or state court within the City of Cleveland,
Ohio, having subject matter jurisdiction in the matter for purposes of any
Action arising out of this Agreement.
10.4 Notices.
All
notices, consents, requests, demands and other communications hereunder will
be
in writing and will be deemed to have been duly given or delivered if delivered
personally, telexed with receipt acknowledged, mailed by registered or certified
mail return receipt requested, sent by facsimile with confirmation of receipt,
or delivered by a recognized commercial courier addressed as
follows:
If
to MAF
to:
MAF
Bancorp, Inc.
55th&
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇
▇.
▇▇▇▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
With
copies to:
MAF
Bancorp, Inc.
55th&
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
55
Vedder,
Price, ▇▇▇▇▇▇▇ & Kammholz, P.C.
▇▇▇
▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇
▇.
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
If
to
National City to:
National
City Corporation
▇▇▇▇
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
Attn.: Chairman
of the Board
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
With
a
copy to:
National
City Corporation
Law
Department
▇▇▇▇
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇.: General
Counsel
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
or
to
such other address as any Party may have furnished to the other Party in writing
in accordance with this Section 10.4.
10.5 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which will
be
deemed to be an original but all of which together will constitute but one
agreement.
10.6 Parties
in Interest; Assignment.
Except
for Section 3.2 above (which is intended to be for the benefit of the
holders of MAF Options, RSUs and DSUs to the extent contemplated thereby and
their beneficiaries, and may be enforced by such Persons) and Sections 6.5
and 6.9 hereof (which are intended to be for the benefit of directors, officers
or employees to the extent contemplated thereby and their beneficiaries, and
may
be enforced by such Persons), this Agreement is not intended to nor will it
confer upon any other Person (other than the Parties or the D&O Indemnitees)
any rights or remedies. Except as herein expressly provided, without the prior
written consent of the other Party, neither Party shall assign any rights or
delegate any obligations under this Agreement. Any such purported assignment
or
delegation made without prior consent of the other Party shall be null and
void.
This Agreement shall be binding upon and enforceable against each Party’s
successors, permitted assigns, heirs, beneficiaries and legal
representatives.
10.7 Expenses.
Each
Party will bear all expenses incurred by it in connection with this Agreement
and the transactions contemplated hereby.
10.8 Enforcement
of this Agreement.
The
Parties agree that irreparable damage would occur in the event that any of
the
provisions of this Agreement were not performed in accordance
56
with
their specific terms or were otherwise breached. It is accordingly agreed that
the Parties will be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions
hereof.
10.9 Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of Law or public policy, all other terms and
provisions of this Agreement will nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any Party. Upon
any
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the Parties will negotiate in good faith to modify
this Agreement so as to effect the original intent of the Parties as closely
as
possible in an acceptable manner to the end that the transactions contemplated
by this Agreement are consummated to the extent possible.
10.10 Update
and Supplement to Disclosure Letters.
MAF and
National City shall be permitted to update and supplement their respective
Disclosure Letters so as to disclose other information or exceptions to one
or
more representations or warranties contained in Article IV hereof in the
case of National City and Article V hereof in the case of MAF which are a
result of events which occur, or knowledge first obtained, after the date
hereof; provided,
however,
that,
(a) no exceptions or other information set forth on any such updated or
supplemented Disclosure Letter shall be deemed to cure any representation or
warranty which was not true and correct as of the date hereof, and (b) the
exceptions and other information set forth on any such updated or supplemented
Disclosure Letter shall not be taken into consideration in determining, for
purposes of this Agreement, whether the conditions set forth in Section 8.2
in the case of MAF, and Section 8.3 hereof in the case of National City
shall have been satisfied, except to the extent a Party has waived or is deemed
to have waived any breach of Section 8.2 or 8.3 as applicable pursuant to
Section 6.18, and (c) this Section 10.10 shall not relieve any Party
of its obligations under any covenant set forth herein, except to the extent
a
Party has waived or is deemed to have waived any covenant under this Agreement
pursuant to Section 6.18.
10.11 Legal
Fees.
In the
event a lawsuit is filed by any Party to enforce any provision hereof, the
prevailing Party, as determined by the court, shall be entitled to an award
from
the non-prevailing Party of the prevailing Party’s reasonable attorney’s fees
and costs through all levels of litigation.
[Remainder
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57
Agreement
and Plan of Merger Signature Page
IN
WITNESS WHEREOF, the Parties have caused their duly authorized representatives
to execute this Agreement as of the date first above written.
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MAF
BANCORP, INC.
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| By: | /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman of the
Board and Chief Executive Officer
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NATIONAL
CITY CORPORATION
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| By: | /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman of the
Board
and Chief Executive Officer
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